shepherd industries limited · 2018-03-25 · sebl southeast bank ltd syl shepherd yarn limited i...

Shepherd Industries Limited

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“Investment in capital market involves certain degree of risks. The investors are required to read

the prospectus and risk factors carefully, assess their own financial conditions and risk taking

ability before making their investment decisions.”

PUBLIC ISSUE OF 20,000,000 ORDINARY SHARES

ISSUE DATE OF THE PROSPECTUS:

OFFER PRICE TK. 10/- EACH AT PAR

Opening and closing date of subscription

Opening

Closing date of subscription


ALPHA CAPITAL MANAGE


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their investment decisions.”

ISSUE OF 20,000,000 ORDINARY SHARES

ISSUE DATE OF THE PROSPECTUS: 08 December 2016

AT PAR TOTAL SIZE OF FUND TO BE RAISED TK. 200,000,000

Opening and closing date of subscription:

Opening date of subscription: 08 January 2017

date of subscription (Cut-off date): 16 January 2017

PROSPECTUS

Name of Issuer:


Name of Issue Managers:

ALPHA CAPITAL MANAGEMENT LIMITED



OF FUND TO BE RAISED TK. 200,000,000


2

Preliminary Information and Declarations:

NAME & ADDRESS CONTACT PERSON CONTACT NO.

ISSUER

SHEPHERD INDUSTRIES LIMITED

House#24, Road#04, Sector#04,

Uttara Model Town, Dhaka-1230

Mr. Ataur Rahman

Chief Financial Officer

Tel: +88-02-7913340-42

Fax: +88-02-7913359-60 E-mail: [email protected]

Web: www.shepherdbd.com

ISSUE MANAGER

ALPHA CAPITAL MANAGEMENT

LIMITED

Eastern Arzoo Complex (7th

Floor),

61, Bijoynagar, Dhaka-1000.

Noor Ahamed FCA

CEO and Managing Director

Tel: +88-02-8316540,8313947,8316519

Fax: +88-02-8316547

E-mail: [email protected]

Web: www.acmlbd.com

UNDERWRITER

ALPHA CAPITAL MANAGEMENT

LIMITED


Floor),

61, Bijoynagar, Dhaka-1000

Noor Ahamed FCA


Tel: +88-02-8316540,8313947,8316519

Fax: +88-02-8316547


Web: www.acmlbd.com

AUDITOR

MAHFEL HUQ & CO.

Chartered Accountants

BGIC Tower (4th

Floor)

34, Topkhana Road Dhaka-1000.

Abdul Kayum Akhunjee

Manager

Tel: +88-02-7171316, +88-02-9553143

Fax: +88-02-9571005


Web: www.mahfelhuq.com

VALUER

MRIDHA & ASSOCIATES

Sugandha Super Market (2nd

Floor)

Savar Bazar Bus Stand, Savar, Dhaka

Ayub Ali Mridha

Proprietor

Tel: +88-02-7748712

Mobile: 01715-013253;

e-mail: [email protected]

“A PERSON INTERESTED TO GET A PROSPECTUS MAY OBTAIN FROM THE ISSUER, AND THE ISSUE MANAGERS.”

“If you have any query about this document, you may consult the issuer, issue manager and underwriter”


3

“CONSENT OF THE BANGLADESH SECURITIES AND EXCHANGE COMMISSION HAS BEEN OBTAINED TO THE

ISSUE/OFFER OF THESE SECURITIES UNDER THE SECURITIES AND EXCHANGE ORDINANCE, 1969, AND THE

BANGLADESH SECURITIES AND EXCHANGE COMMISSION (PUBLIC ISSUE) RULES, 2015. IT MUST BE

DISTINCTLY UNDERSTOOD THAT IN GIVING THIS CONSENT THE COMMISSION DOES NOT TAKE ANY

RESPONSIBILITY FOR THE FINANCIAL SOUNDNESS OF THE ISSUER COMPANY, ANY OF ITS PROJECTS OR THE

ISSUE PRICE OF ITS SECURITIES OR FOR THE CORRECTNESS OF ANY OF THE STATEMENTS MADE OR OPINION

EXPRESSED WITH REGARD TO THEM. SUCH RESPONSIBILITY LIES WITH THE ISSUER, ITS DIRECTORS, CHIEF

EXECUTIVE OFFICER, MANAGING DIRECTOR, CHIEF FINANCIAL OFFICER, COMPANY SECRETARY, ISSUE

MANAGER, ISSUE MANAGER’S CHIEF EXECUTIVE OFFICER, UNDERWRITERS, AUDITOR(S), VALUER AND/OR

CREDIT RATING COMPANY (IF ANY)."

“Risks in relation to the First Issue”

"This being the first issue of the issuer, there has been no formal market for the securities of the issuer. The

face value of the securities is tk. 10.00 (ten) and the issue price is tk. 10.00, i.e. the face value. The issue

price has been determined and justified by the issuer and the issue manager as stated under the paragraph

on “justification of issue price” should not be taken to be indicative of the market price of the securities

after listing. No assurance can be given regarding an active or sustained trading of the securities or the

price after listing."

“General Risk”

"Investment in securities involves a degree of risk and investors should not invest any funds in this offer

unless they can afford to take the risk of losing their investment. Investors are advised to read the risk

factors carefully before taking an investment decision in this offer. For taking an investment decision,

investors must rely on their own examination of the issuer and the offer including the risks involved. The

securities have not been recommended by the Bangladesh Securities and Exchange Commission (BSEC) nor

does BSEC guarantee the accuracy or adequacy of this document. Specific attention of investors is invited

to the statement of ‘risk factors’ given on page number(s) 151-159"

“Shepherd Industries Limited’s Absolute Responsibility”

"The issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this

prospectus contains all material information with regard to the issuer and the issue, that the information

contained in the prospectus are true, fair and correct in all material aspects and are not misleading in any

respect, that the opinions and intentions expressed herein are honestly held and that there are no other

facts, the omission of which make this document as a whole or any of such information or the expression of

any such opinions or intentions misleading in any material respect."


4

AVAILABILITY OF PROSPECTUS

The Prospectus and abridged version prospectus in hard and soft forms of the Company shall be obtained

from the following addresses:

NAME & ADDRESS CONTACT PERSON TELEPHONE & FAX NUMBER, E-MAIL,

WEB ADDRESS

ISSUER COMPANY


House#24, Road#04, Sector#04,

Uttara Model Town, Dhaka-1230

Mr. Ataur Rahman


Tel: +88-02-7913340-42

Fax: +88-02-7913359-60 Email:[email protected]

Web:www.shepherbd.com

ISSUE MANAGER



Floor), 61, Bijoynagar, Dhaka-1000.

Noor Ahamed FCA


Tel: +88-02-

8316540,8313947,8316519

Fax: +88-02-8316547


web:www.acmlbd.com

UNDERWRITER



Floor), 61, Bijoynagar, Dhaka-1000.

Noor Ahamed FCA


Tel: +88-02-

8316540,8313947,8316519

Fax: +88-02-8316547


web:www.acmlbd.com

STOCK EXCHANGES

DHAKA STOCK EXCHANGE LIMITED (DSE)

DSE LIBRARY, RESEARCH AND INFORMATION

DEPARTMENT,

9/F, MOTIJHEEL C/A, DHAKA-1000.

Mr. Md. Afzalur Rahman

Manager

Tel: +88 02 9564601-7, 9666944-8

Fax: +88 02 9569755, 9564727

e-mail: research @dsebd.org

website: www.dsebd.org

CHITTAGONG STOCK EXCHANGE LIMITED (CSE)

CSE BUILDING, 1080, SHEIKH MUJIB ROAD,

CHITTAGONG-41000.

DHAKA LIAISON OFFICE: 52-53, DILKUSHA C/A,

DHAKA-1000.

Mr. Mohammad Jabed

Sarwar

Assistant Manager

Tel: +88 031 714632-3

, +88 031 720871

Fax: +88 031 714101; +88 02

9513911-15

e-mail: [email protected]

website: www.cse.com.bd

Prospectus would also be available on the web sites of BSEC (www.sec.gov.bd), DSE (www.dsebd.org), CSE

(www.csebd.com), Shepherd Industries Limited (www.shepherdbd.com), AlphaCapitalManagement

Limited(www.acmlbd.com) and at the Public Reference room of the Bangladesh Securities and Exchange

Commission (BSEC) for reading and studying.

Names and dates of the newspapers where abridged version of prospectus was published:

Sl. No. Newspaper Name Date

1 The Financial Express 11/12/2016

2 New Age 11/12/2016

3 Bonik Barta 11/12/2016

4 The Daily Samakal 11/12/2016


5

Definitions and Acronyms/Elaborations

A

N

Allotment Letter of allotment for shares

NAV Net Asset Value of the Company

NBR National Board of Revenue

B

NRB Non Resident Bangladeshi

BB Bangladesh Bank

NBL National Bank Limited

BO A/C Beneficiary Owner Account or Depository Account

BSEC Bangladesh Securities and Exchange Commission

O

BDYEA Bangladesh Dyed Yarn Exporters Association Offering Price Price of the securities of SIL being offered

BGMEA Bangladesh Garment Manufacturers and

Exporters Association

BTMA Bangladesh Textile Mills Association P

BKMEA Bangladesh Knitware Manufacturers &

Exporters Association PSI Pre Shipment Inspection

C

R

Commission Bangladesh Securities and Exchange Commission

Registered

Office Registered Office of SIL

Companies

Act The Companies Act, 1994 (Act. No. XVIII of 1994)

RJSC

Registrar of Joint Stock Companies &

Firms

CSE Chittagong Stock Exchange Limited

RMG Ready Made Garment

D

S

DSE Dhaka Stock Exchange Limited

SC Share Certificate

SIL Shepherd Industries Limited

F Securities Shares of Shepherd Industries Limited

FC Account Foreign Currency Account

Share Market Market of the Securities

FI Financial Institution

Sponsors The sponsor shareholders of SIL

Stockholders Shareholders

G

Subscription Application money

GOB The Government of People’s Republic of

Bangladesh SEBL Southeast Bank Ltd

SYL Shepherd Yarn Limited

I

IPO Initial Public Offering T

Issue Public offer of SIL’s shares The Company Shepherd Industries Limited

Issuer Shepherd Industries Limited

TBL Trust Bank Limited

IFIC IFIC Bank Ltd


6

Table of Contents

SECTION (I): EXECUTIVE SUMMARY ................................................................................................ 9

(a) About the industry .............................................................................................................................. 9

(b) About the Issuer .................................................................................................................................. 9

(c) Financial Information ........................................................................................................................ 10

(d) Features of the issue and its objects ................................................................................................ 11

(e) Legal and other Information ............................................................................................................. 12

(f) Promoters’ background .................................................................................................................... 13

(g) Capital structure and history of capital raising ................................................................................. 14

(h) Summary of Valuation Report of securities ...................................................................................... 14

(i) Others ............................................................................................................................................... 14

SECTION (II): CONDITIONS IMPOSED BY THE COMMISSION IN THE CONSENT LETTER .................. 16

Disclosure in respect of issuance of securities in demat form ................................................................ 16

Conditions Under 2cc Of The Securities And Exchange Ordinance, 1969 ............................................... 16

SECTION (III): DECLARATION AND DUE DILIGENCE CERTIFICATES .................................................. 23

Declaration about the responsibility of the directors, including the ceo of the issuer in respect of

the prospectus ......................................................................................................................................... 23

Due diligence certificate by issue manager(s) ......................................................................................... 24

Due Diligence Certificate By The Underwriter(S) .................................................................................... 26

SECTION: (IV): ABOUT THE ISSUER ................................................................................................ 27

a) Name of the issuer, Dates of incorporation, Commencement of its commercial operations,

Logo, Addresses of its registered office, Other offices and plants (Factory), Telephone number,

Fax number, Contact person, Website address, E-mail address ............................................................. 27

b) The names of the sponsors and directors of the issuer ...................................................................... 27

(c) The name, logo and address of the auditors along with their telephone numbers, fax numbers,

contact persons, website and e-mail addresses ..................................................................................... 28

(d) The name(s) of the stock exchanges where the specified securities are proposed to be listed. ...... 28

SECTION (V): CORPORATE DIRECTORY OF THE ISSUER .................................................................. 29

SECTION (VI): DESCRIPTION OF THE ISSUER .................................................................................. 30

(a) Summary ........................................................................................................................................... 30

(b) General Information ......................................................................................................................... 31

(c) Capital Structure ............................................................................................................................... 35

(d) DESCRIPTION OF BUSINESS ............................................................................................................... 49

(e) Description of Property..................................................................................................................... 58

(f) Plan of Operation and Discussion of Financial Condition .................................................................. 85


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SECTION (VII): MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULT OF OPERATIONS ............................................................................................................. 113

a) Overview of business and strategies .............................................................................................. 113

b) SWOT Analysis ................................................................................................................................ 113

c) Analysis of the financial statements of last five years with reason(s) of fluctuating

revenue/sales, other income, total income, cost of material, finance cost, depreciation and

amortization expense, other expense; changes of inventories, net profit befoe & after tax, EPS

etc. .................................................................................................................................................. 116

d) Known trends, demands, commitments, events or uncertainties that are likely to have an

effect on the company’s business .................................................................................................. 118

e) Trends or expected fluctuations in liquidity ................................................................................... 118

f) Off-balance sheet agreements those have or likely to have a current or future effect on

financial condition .......................................................................................................................... 118

SECTION (VIII): DIRECTORS AND OFFICERS .................................................................................. 119

a) Name, Father’s Name, age, Residential address, Educational qualification, experience and

position of each director and nominated director with nomination period, organization name .. 119

b) Date of first Directorship and Expiry of Current Tenure of the directors ....................................... 119

c) Name of Interest and Involvement in other business/organization of directors ........................... 119

d) Statement of if any Directors of the issuer are associated with the securities market in any

manner and any director of the issuer company is also director of any issuer of other listed

securities during last three years with dividend payment history and market performance ........ 120

e) Family relationship (father, mother, spouse, brother, sister, son, daughter, spouse’s father,

spouse’s mother, spouse’s brother, spouse’s sister) among the directors and top five officers ... 120

f) Brief description of other businesses of the directors ................................................................... 120

g) Short bio-data of each director ...................................................................................................... 121

h) Loan status of the issuer, its directors and shareholders who hold 5% or more shares in the

paid-up capital of the issuer in terms of the CIB Report of Bangladesh Bank ................................ 121

i) Name, position, educational qualification, age, date of joining in the company, overall

experience (in year), previous employment, salary paid for the financial year of the CEO, MD,

CFO, CS, Advisers, Consultants and all Departmental Heads. If the Chairman, any director or

any shareholder received any monthly salary than this information should also be included ...... 122

j) Changes in the key management persons during the last three years .......................................... 123

k) A profile of the sponsors including their names, father’s names, age, personal addresses,

educational qualifications, and experiences in the business, positions/posts held in the past,

directorship held, other ventures of each sponsor and present position ...................................... 123

l) If the present directors are not the sponsors and control of the issuer was acquired within

five years immediately preceding the date of filing prospectus details regarding the


8

acquisition of control, date of acquisition, terms of acquisition, consideraton paid for such

acquisition etc. ................................................................................................................................ 123

m) If the sponsors/directors do not have experience in the proposed line of business, the fact

explaining how the proposed activities would be carried out/managed ....................................... 123

n) Interest of the key management persons ...................................................................................... 123

o) All interests and facilities enjoyed by the directors, whether pecuniary or non-pecuniary .......... 123

p) Number of shares held and percentage of shareholding (pre issue) ............................................. 124

q) Change in board of directors during last three years ..................................................................... 124

r) Director’s engagement with similar business ................................................................................. 124

SECTION (IX): CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ...................................... 125

SECTION (X): EXECUTIVE COMPENSATION .................................................................................. 127

SECTION (XI): OPTIONS GRANTED TO DIRECTORS, OFFICERS AND EMPLOYEES .......................... 127

SECTION (XII): TRANSACTION WITH THE DIRECTORS AND SUBSCRIBERS TO THE MEMORANDUM

.................................................................................................................................................... 128

SECTION (XIII): OWNERSHIP OF THE COMPANY’S SECURITIES ..................................................... 128

SECTION (XIV): CORPORATE GOVERNANCE ................................................................................. 136

SECTION (XV): VALUATION REPORT OF SECURITIES PREPARED BY THE ISSUE MANAGER ........... 144

SECTION (XVI): DEBT SECURITIES ................................................................................................. 145

SECTION (XVII): PARTIES INVOLVED AND THEIR RESPONSIBILITIES, AS APPLICABLE ................... 146

SECTION (XVIII): MATERIAL CONTRACTS ..................................................................................... 147

SECTION (XIX): OUTSTANDING LITIGATIONS, FINE OR PENALTY ................................................. 150

SECTION (XX): RISK FACTORS AND MANAGEMENT’S PERCEPTION ABOUT THE RISKS................. 151

SECTION (XXI): DESCRIPTION OF THE ISSUE ................................................................................. 160

SECTION (XXII): USE OF PROCEEDS .............................................................................................. 161

SECTION (XXIII): LOCK-IN ............................................................................................................. 183

SECTION (XXIV): MARKETS FOR THE SECURITIES BEING OFFERED ............................................... 185

SECTION (XXV): DESCRIPTION OF SECURITIES OUTSTANDING OR BEING OFFERED ..................... 186

SECTION (XXVI): FINANCIAL STATEMENTS................................................................................... 187

SECTION (XXVII): PUBLIC ISSUE APPLICATION PROCEDURE ......................................................... 257

SECTION (XXVIII):AUDITORS' ADDITIONAL DISCLOSURES ............................................................ 262

SECTION (XXIX): MANAGEMENT’S ADDITIONAL DISCLOSURES REQUIRED TO SUBMIT AND

INCORPORATED IN THE PROSPECTUS.......................................................................................... 277

SECTION (XXX): CERTIFICATE FROM AN INDEPENDENT AUTHORITY REGARDING CAPACITY OF ETP

MACHINE..................................................................................................................................... 279


9

SECTION (I): EXECUTIVE SUMMARY

(a) About the industry:

Dyeing is the process of adding color to textile products like fibers, yarns, and fabrics. Dyeing is normally

done in a special solution containing dyes and particular chemical material. After dyeing,

dye molecules have uncut chemical bond with fiber molecules. The temperature and time controlling are

two key factors in dyeing.

Bangladesh is one of the largest producers of textiles and garments products. Abundant availability of

raw materials and cheap labor has made the country a sourcing hub. With the improvement of the

Textile & RMG sector in Bangladesh a lot of backward linkage industries have been established to support

the Textile & RMG sector. Dyeing industry is one of the most important backward linkage industries for

the Textile & RMG sector, the demand of which is increasing day by day considering the development of

the Textile & RMG sector.

(b) About the Issuer:

Shepherd Industries Ltd. (SIL) was established in 2000 in Bangladesh as a private limited company. SIL has

commenced its operation on October 18, 2001. With nearly 16 years of sweater yarn dye experience and

innovation Shepherd Industries Limited grown up in times. Production machineries of the company are

equipped with the State of the art technology. The laboratory is monitored by expert technicians. The

company is committed with quality control, accurate time delivery, and large production capacity.

SIL’s main products includes: Various types of cotton, Acrylic, Wool, Nylon, Viscose blended dyed yarn.


Page | 10

(c) Financial Information:

Major financial information of Shepherd Industries Limited (SIL) is as follows:

As per audited financial statements

Sl. Particulars 01-Apr-15

to

30-Jun-16

01-Apr15

to

31-Mar-16 01-Apr-15

01-Jan-15

To

31-Mar-15

1-Jan-14

to

31-Dec-14

1-Jan-13

to

31-Dec-13

1-Jan-12

to

31-Dec-12

1-Jan-11

to

31-Dec-11 Re-stated Re-stated

1 Turnover 756,861,925 2,636,557,896 - 390,141,810 1,780,751,795 1,878,484,554 1,883,339,590 1,179,310,883

2 Gross Profit 87,451,424 304,876,358 - 43,211,059 204,051,984 211,260,196 151,028,313 111,951,056

3 Net profit before tax 59,901,062 147,198,894 - 14,342,845 91,775,618 54,192,576 2,102,356 1,198,369

4 Net Profit after tax 48,199,648 131,340,828 - 12,041,477 76,313,041 34,969,372 1,787,002 1,018,614

5 Total Assets 3,856,275,737 3,878,035,686 3,678,117,829 2,392,155,140 2,578,542,251 2,530,602,965 2,494,283,888 2,045,051,107

6 Share Capital 1,042,059,860 1,042,059,860 191,194,000 88,574,000 88,574,000 88,574,000 88,574,000 88,574,000

7 Retained Earnings 353,760,682 303,605,008 157,668,849 32,355,290 18,733,423 (55,502,229) (39,865,601) (38,871,544)

8 No. of Shares 104,205,986 104,205,986 1,911,940 885,740 885,740 885,740 885,740 885,740

9 Face Value 10 10 100 100 100 100 100 100

10 NAV Per Share (With Revaluation) 18.70 18.56 750.50 1061.69 1048.10 979.50 1026.64 1025.87

11 NAV Per Share (With Revaluation

Reserve)(Considering Face Value Tk. 10/- for all year)

18.70 18.56 75.05 106.17 104.81 97.95 102.66 102.59

12 NAV Per Share (Without Revaluation Reserve) 13.39 13.24 431.91 636.94 621.57 545.04 562.70 561.93

13 NAV Per Share (Without Revaluation

Reserve)(Considering Face Value Tk. 10/- for all year)

13.39 13.24 43.19 63.69 62.16 54.50 56.27 56.19

14 Earnings per Share (EPS) 0.46 4.37 - 13.59 86.16 39.48 2.02 1.15

15 Earnings per Share (EPS) (Considering Face Value Tk.

10/- for all year)

0.46 4.37 - 1.36 8.62 3.95 0.20 0.12

*Face value of company’s share was Tk. 100/- each and was converted in to Tk. 10/- vide EGM dated June 08, 2015; Face value of shares on the above table was

considered as Tk. 10/- for better presentation.


Page | 11

(d) Features of the issue and its objects:

Shepherd Industries Limited (SIL) is engaged in dyeing of different counts of yarn and to market the

processed yarn to various sweater industries in Bangladesh as deemed exporter. The Company intends to

issue 20,000,000 ordinary shares of Tk. 10.00 each through Initial public offering (IPO) at an issue price of

Tk. 10.00 totaling to Tk. 200,000,000.00 subject to regulatory approvals.

Net Proceeds from initial public offering (IPO) will be used for civil construction (for washing Plant),

acquisition and installation of new machineries (for washing plant and expansion unit), Expansion of ETP

(For Washing plant and BMRE), to repay the short term bank loan of the company and to meet up the IPO

expenses.


Page | 12

(e) Legal and other Information:

Sl. Name of License/Registration/NOC License Issuer/Issuing Authority Certificate / License No. Issue Date Validity Status Remarks

1 Incorporation RJSC Private Limited Company Reg No: C-41066(425)/2000

August 21, 2000

N/A

2 Certificate of Commencement of Business

RJSC N/A N/A N/A Incorporated as private limited company

3 Trade License Bhaluka Powroshova 01562 08-07-2015 Valid up to 2016-17 4 ERC CCI&E Ra 53255 30-01-2001 Valid up to 2016-17 5 IRC CCI&E BA 104118 30-07-2001 Valid up to 2016-17

6 Fire Bangladesh Fire Service and Civil Defense

Mymen/811/2001 01-08-2001 Valid up to 2016-17

5 Kolkarkhana o Protishthan Prodhan Poridorshok Kolkarkhana O Protishthan

10958/Mymensingh 16-08-2001 Valid till June, 2017

6 Bonded Warehouse Customs Bond Commissionarate 5(13) 210/cus-bond/li:/2001/part-3/2014/13721

18-08-2015 Valid Till 15-08-2017

7 BOI Registration Board of Investment BOI/R&I-1/2520/2001/62 21-01-2001 N/A

8 Environment Certificate Department of Environment Poribesh/dhabi/3704/2557 31-10-2016 Valid up to 22-06-2017

9 Boiler Office of Chief Boiler Inspector

�� 30/12/15 29/11/2016

�� 30/12/15 29/11/2016

�� 30/12/15 29/11/2016

�� 10/08/16 10/02/2017

10 Membership Certificate The Maymensingh Chamber of Commerce & Industry

Sl. No. 17867 14-07-2016 Valid Till 30-06-2017

11 Membership Certificate Bangladesh Dyed Yarn Exporters Association

Sl. No. 12 21-01-2013 Valid Till 31-12-

2016

12 TIN Certificate National Board of Revenue e-TIN: 815674589022 06-10-2013 N/A 13 Value Added Tax National Board of Revenue 18091004625 13-11-2012 N/A 14 Oeko-Tex Standard 100

HKYO 105586 Testex Institute of the International Association for Research and Testing in the Field of Textile Ecology

BD-2240 Mymenshing 07-10-2015 Valid until 15-08-

2017


Page | 13

(f) Promoters’ background:

When the company was incorporated the following persons were the subscribers to the memorandum:

Sl. Name Present Status in the company Remarks

1 Mr. Chen Kuo Kung Resigned and left the company Transferred his entire shares

2 Mr. Mafiz Ahmed Bhuyian Resigned and left the company Transferred his entire shares

3 A.K.M Zakir Hossain Resigned and left the company Transferred his entire shares

4 Mr. Cheng Che Seng Shareholder Resigned from the post of director

5 Mr. Yang Ming Te Shareholder and representative of

Eternal Flame Int’l. Co. Inc. -

6 Ms Chiu Ching Ping Resigned and left the company Transferred her entire shares

Chen Kuo Kung

Mr. Chen Kuo Kung, A Taiwanese national was the founder chairman and Director of Shepherd Industries

Ltd and Shepherd Textile (BD) Ltd. As pioneer of Dyeing industries in Bangladesh, he set up his first

venture at Dhaka Export Processing Zone named Shepherd Textile (BD) Ltd in 1997. Soon after successful

establishment of this venture and to meet up the demand of textile industries he formed Shepherd

Industries Ltd at Bagrapara, Kathalia, Bhaluka, Mymensingh in the year 2000. He resigned from Shepherd

Industries Ltd in September, 2000 and transferred his entire shares.

Mafiz Ahmed Bhuyian:

Mr. Mafiz Ahmed Bhuyian was a Sponsor Director and Managing Director of Shepherd Industries Ltd. Mr.

Bhuiyan is an entrepreneur and has the distinction of making substantial contribution in setting up

Backward Linkage Industry of RMG/Textile sector in its early years. He left Shepherd Industries Limited in

2009 by transferring his entire shares.

A.K.M Zakir Hossain

A.K.M. Zakir Hossain was the sponsor Director of Shepherd Industries Ltd and born and brought up at

Comilla in a renowned Muslim family. He obtained his Master’s degree in economics from University of

Chittagong. He was vastly experienced in Garments and Textile sector. Under his guidance, production,

sales and delivery team of Shepherd Industries Ltd achieved lot of mile stones. He was also sponsor

Director of Shepherd Textile (BD) Ltd. At present he does not hold any share of the company’s paid up

capital and its related business. Mr. Zakir transferred his entire shares in 2005 and left the company.

Mr. Cheng Che Seng

Cheng Che Seng, was a sponsor director of Shepherd Industries Limited with huge experience in the in

Textile Industry and a Taiwan national. He worked for Dachiang Dyeing Factory (Taiwan) as Laboratory in

charge and as Production Manager of Cotton and Acrylic Dyeing Department; Alfateme Textiles Company

(Pakistan) as Managing Director. Mr. Cheng Che Seng is presently a shareholder of the company.

Mr. Yang Ming Te,

Mr. Yang Ming Te is a Taiwan national and Director of Shepherd Industries Limited. He is experienced in

the dying industry and brought a broader vision in sales, marketing and customer care to start-up and

high- growth companies. He always put positive impact towards the company to maximize its wealth. He

is one of the shareholder of the company and representing Eternal Flame Int’l Co. Inc in the board of

Shepherd Industries Limited.

Ms Chiu Ching Ping

Ms. Chiu Ching Ping was the sponsor director of Shepherd Industries ltd. She was born and brought up in

Taiwan and hails from a renowned business family. She obtained her Masters’ degree in business

administration from Taiwan. At present she does not hold any shares in the paid up capital of the

company. She transferred her entire shares on September, 2013 and left the company.


14

(g) Capital structure and history of capital raising:

Particulars No of Shares Face Value (Tk.) Amount in Taka

Authorized Capital 190,000,000 10 1,900,000,000

Before IPO:

Paid up capital 104,205,986 10 1,042,059,860

Total paid up capital before IPO (A) 104,205,986 10 1,042,059,860

After IPO:

To be issued as IPO (B) 20,000,000 10 200,000,000

Paid up capital (Post IPO) (A+B) 124,205,986 10 1,242,059,860

The Company has raised its paid-up capital in following phases:

Particulars Date Consideration No of

Ordinary

Shares

Amount Tk.

MOA and AOA 01/08/2000 Cash 60,600 606,000

1st Allotment 01/07/2002 Cash 7,939,400 79,394,000

2nd Allotment 12/11/2011 Cash 857,400 8,574,000

3rd Allotment (Through Amalgamation with

Shepherd Yarn Limited)

01/04/2015 Share 10,262,000 102,620,000

4th Allotment 14/02/2016 Cash 85,086,586 850,865,860

Total 104,205,986 1,042,059,860

*Face value of company’s share was Tk. 100/- each and was converted into Tk. 10/- vide EGM dated June

08, 2015; Face value of shares on the above table was considered at Tk. 10/- for better presentation.

(h) Summary of Valuation Report of securities:

Particulars Amount (in Tk.)

Method 1: Net Asset Value (NAV) per share/Equity based value per share

Price based on Net Asset Value per share (with revaluation reserve) 18.70

Price based on Net Asset Value per share (without revaluation reserve) 13.39

Method 2: Historical Earnings based value per share

Earnings based Value per share based on Overall Market P/E 13.95

Method 3: Average market price per share of similar stocks: 25.56

(i) Others:

Summary of Amalgamation Scheme with Shepherd Yarn Limited:

I. Shepherd Industries Limited was amalgamated by the scheme of amalgamation with Shepherd Yarn

Limited by the order of the Honorable High Court of Supreme Court of Bangladesh dated December 15,

2014; with effect from April 01, 2015.

II. Before amalgamation both the companies were controlled by the same management.

III. Financial Information:

At the time of amalgamation the capital structure of both the companies were as follows:

S.L Particulars SIL SYL

31/03/2015 31/03/2015

1. Authorized Capital 1,500,000,000 400,000,000

2. Paid up Capital 88,574,000 102,620,000

3. Total Asset 2,392,155,104 1,459,021,623

4. NAV at the time of amalgamation 1,061.69 481.91

5. Face Value 100 100

6. EPS 13.59 31.40

7. Debt Equity Ratio (Total Debt/Total Equity) 1.54 1.95


15

IV. Basis of Amalgamation:

� To reduce work load, operating cost, administrative cost and other related expenses.

� To avoid accounting complication.

V. Main Feature of the Scheme:

� With affect from the appointed date and subject to the terms of this scheme, the entire business

and whole of the undertakings of the Transferor Company (Shepherd Yarn Limited) including all its

properties and assets (whether movable or immovable, tangible or intangible) of whatsoever

nature, shall pursuant to section 229(2) of the act, without any further act, instrument or deed, be

and stand transferred to and vested in and/or be deemed to have been and stand transferred to

and vested in the transferee Company as a going concern so as to become as and from the

Appointed Date, a part and parcel of the assets, rights, title, interests and authorities of the

Transferee Company (Shepherd Industries Limited).

� All the license, permits, quotas, approvals, permissions, incentives, loans, subsidies, concessions,

grants, rights, claims, lease, tenancies and other benefits of privileges enjoyed or conferred upon

or held or availed of by and all rights and benefits that have accrued which may accrue to the

Transferee Company (Shepherd Industries Limited) shall, pursuant to the provisions of Section

229(2) of the act, without any further act, instrument or deed, be and stand transferred to and

vested in and available to the Transferee Company (Shepherd Industries Limited) so as to become

as and from the Appointed date the licenses, permits, quota, approvals, permissions incentives,

loans, subsides, concessions, grants, rights, claims, leases, tenancies and other benefits or

privileges of the Transferee Company (Shepherd Industries Limited) and shall remain valid

effective and enforceable on the same terms and conditions to the extend permissible under law.

It is hereby clarified that all inter party transactions between any/or all of the Transferor Company

and the Transferee Company (Shepherd Industries Limited) shall be considered as intra party

transactions for all purpose from the Appointed Date.

� Upon the coming into effect of this Scheme and in consideration of the transfer of and vesting of

the undertaking and the Liabilities of the Transferor Company to the Transferee Company

(Shepherd Industries Limited) in terms of this Scheme, the Transferee Company (Shepherd

Industries Limited) shall without any further application, act, instrument of deed, issue and allot to

the ordinary shareholders of the Transferor Company (Shepherd Yarn Limited whose names are

recorded in the Register of Members (the “Member”) on a date hereinafter referred to as (the

“Record Date”) to be fixed by the Board of Directors of the Transferee Company (Shepherd

Industries Limited), Ordinary shares of Tk. 100.00 (Taka one hundred) each, credited as fully paid

up in the ratio of 1 ordinary shares in the Transferee Company (Shepherd Industries Limited) for

every 1 (one) ordinary share of the face value of Tk. 100.00 (Taka one hundred) each held in the

Transferee Company (Shepherd Industries Limited.


16

SECTION (II): CONDITIONS IMPOSED BY THE COMMISSION IN THE CONSENT LETTER

Disclosure In Respect Of Issuance Of Securities In Demat Form

As per provision of the Depository Act, 1999 and regulation made there under, shares will be issued in

dematerialized condition. All Transfer/transmission/splitting will take place in the Central Depository

Bangladesh Ltd. (CDBL) system and any further issue of shares (rights/bonus) will be issued in dematerialized

form only.

Conditions Under 2CC Of The Securities And Exchange Ordinance, 1969

PART–A

1. The Company shall go for Initial Public Offer (IPO) for 2,00,00,000 ordinary shares of Tk. 10.00 each at par

totaling to Tk. 20,00,00,000.00 (Taka twenty Crore only) following the Securities and Exchange

Ordinance, 1969, the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015, the

Depository Act, 1999 and rules made there under.

2. The abridged version of the prospectus, as approved by the Commission, shall be published by the issuer

in 4 (Four) national daily newspapers (two in Bangla and two in English), within 02 (two) working days of

issuance of this consent letter. The issuer shall post the full prospectus, vetted by Commission, in the

issuer’s website and shall also put on the websites of the Commission, stock exchanges, and the issue

manager, within 3 (three) working days from the date of issuance of this letter and shall remain posted

till the closure of the subscription list. The issuer shall submit to the Commission, the stock exchanges

and the issue manager a diskette containing the text of the vetted prospectus in “MS -Word” format.

3. The company shall submit 40 (Forty) copies of the printed prospectus to the Commission for official

record within 5 (Five) working days from the date of publication of the abridged version of the

prospectus in the newspaper.

4. The issuer company and the issue manager shall ensure transmission of the prospectus and its abridged

version for NRBs through email to the Bangladesh Embassies and Missions abroad within 5 (Five) working

days from the date of publication of the abridged version of the prospectus in the newspaper. A

compliance report shall be submitted in this respect to the Commission jointly by the issuer and the Issue

Manager within 02 (Two) working days from the date of said transmission of the prospectus.

5. The following declaration shall be made by the company in the prospectus, namely: -

“Declaration about Listing of Shares with the stock exchange (s):

None of the stock exchange(s), if for any reason, grants listing within 75 (Seventy Five) days from the

closure of subscription, any allotment in terms of this prospectus shall be void and the company shall

refund the subscription money within 15 (Fifteen) days from the date of refusal for listing by the stock

exchanges, or from the date of expiry of the said 75 (Seventy Five) days, as the case may be.

In case of non-refund of the subscription money within the aforesaid 15 (Fifteen) days, the Directors of

the company, in addition to the issuer company, shall be collectively and severally liable for refund of the

subscription money, with interest at the rate of 2% (two percent) above the bank rate, to the

subscribers concerned.

The issue manager, in addition to the issuer company, shall ensure due compliance of the above

mentioned conditions and shall submit compliance report thereon to the Commission within 07 (Seven)

days of expiry of the aforesaid 15 (Fifteen) days time period allowed for refund of the subscription

money.”


17

6. All applicants shall apply for a minimum lot of 500 shares worth Taka 5,000/- (Taka five thousand only) or

its multiples.

7. The IPO shall stand cancelled in case of under-subscription in any category above 35%. In such an event,

the issuer and issue manger shall inform the Commission within 2 (two) working days and release the

subscription money within 10 (ten) working days after receiving verification report from CDBL and the

information from exchanges regarding subscription.

8. 20% of the securities reserved for other general public shall be reserved for ¶wZMÖ ’ ¶z`ª wewb‡qvMKvix. In

case of under-subscription under any of sub-categories of eligible investors category or general public

category, the unsubscribed portion shall be added to other sub-category of the same category. In case

of over subscription in the general public category, the issuer and the issue manager shall jointly

conduct an open lottery. In case of over subscription in the eligible investors category, securities shall

be allotted on pro-rata basis. No eligible investor shall apply for more than 10% (ten percent) of the

total securities reserved for the other eligible investors.

9. An applicant cannot submit more than two applications, one in his/her own name and the other jointly

with another person. In case, an applicant submits more than two applications, all applications will be

treated as invalid and will not be considered for allotment purpose. In addition, 15% (fifteen) of the

application money will be forfeited by the Commission and the balance amount will be refunded to the

applicant.

10. The applicants who have applied for more than two applications using same bank account, their

application will not be considered for lottery and the Commission will forfeit 15% of their subscription

money.

11. Making of any false statement in the application or supplying of incorrect information therein or

suppressing any relevant information in the application shall make the application liable to rejection

and subject to forfeiture of 25% of the application money and/or forfeiture of share (unit) before or

after issuance of the same by the issuer. The said forfeited application money or share (unit) will be

deposited in account of the Bangladesh Securities and Exchange Commission (BSEC). This is in addition

to any other penalties as may be provided for by the law.

12. The company shall furnish the list of allotees to the Commission and the stock exchange(s)

simultaneously in which the shares will be listed, within 24 (Twenty Four) hours of allotment.

13. Shares not allotted at the time of according this consent, but allotted after listing, in favor of sponsors,

directors or shareholders having 5% or more shares through stock dividends, shall be subject to a lock-in

period of 02(two) years from the date of issuance of the prospectus.

14. If any share of Sponsors/Directors/Promoters is in paper format, it shall be handed over to securities

custodian registered with the Commission and shall remain held till completion of lock-in period and

the name of the securities custodian shall be furnished to the Commission jointly by the issuer and

issue manager, along with a confirmation thereof from the custodian, within one week of listing of the

shares with the stock exchange(s). Or they (shares of Sponsors/ Directors/ Promoters) can be demated

and shall remain in lock-in under CDBL system and issuer shall submit a dematerialization confirmation

report generated by CDBL and attested by Managing Director of the company along with the lock-in

confirmation to the Commission within one week of listing of the shares with the stock exchange(s). In

respect of shares other than Sponsors/Directors/Promoters the issuer will ensure their lock-in of those

shares and submit a statement to this effect to the Commission.

15. The company shall not declare any dividend/bonus shares before listing of its capital with any

Exchange from the date of this consent for raising of capital.

16. The company shall not engage itself into any merger/amalgamation or acquisition activities without

taking “No Objection” from the Commission, on the scheme of the said merger/amalgamation or


18

acquisition, as recommended by the Board of Directors, before approval by the shareholders in

General Meeting.

PART–B

Application Process

Step-1 (Applicant)

1. An applicant for public issue of securities shall submit application/buy instruction to the Stockbroker/

Merchant Banker where the applicant maintains customer account, within the cut-off date (i.e. the

subscription closing date), which shall be the 25th

(twenty fifth) working day from the date of

publication of abridged version of prospectus.

2. The application/buy instruction may be submitted in prescribed paper or electronic form, which shall

contain the Customer ID, Name, BO Account Number, Number of Securities applied for, Total

Amount and Category of the Applicant. At the same time:

a) Other than non-resident Bangladeshi (NRB) and Foreign applicants shall make the

application money and service charge available in respective customer account maintained

with the Stockbroker/Merchant Banker. No margin facility, advance or deferred payment is

permissible for this purpose. In case the application is made through a margin account, the

application money shall be deposited separately and the Stockbroker/Merchant Banker

shall keep the amount segregated from the margin account, which shall be refundable to

the applicant, if become unsuccessful.

b) Non-resident Bangladeshi (NRB) and Foreign applicants shall submit bank drafts (FDD),

issued in favor of the Issuer for an amount equivalent to the application money, with their

application to the concerned Stockbroker/Merchant Banker. A Non-resident Bangladeshi

(NRB) and Foreign applicant may also submit a single draft against 02(two) applications

made by him/her, i.e. one in his/her own name and the other jointly with another person.

The draft (FDD) shall be issued by the Bank where the applicant maintains NITA/Foreign

Currency account debiting the same account. No banker shall issue more than two drafts

from any NITA/Foreign Currency account for any public issue. At the same time, the

applicant shall make the service charge available in respective customer account maintained

with the Stockbroker/Merchant Banker.

Step-2 (Intermediary)

3. The Stockbroker/Merchant Banker shall maintain a separate bank account only for this purpose

namely “Public Issue Application Account”. The Stockbroker/Merchant Banker shall:

a) post the amount separately in the customer account (other than NRB and Foreign applicants),

and upon availability of fund, block the amount equivalent to the application money;

b) accumulate all the application/buy instructions received up to the cut-off date, deposit the

amount in the “Public Issue Application Account” maintained with its bank within the first

banking hour of next working day of the cut-off date. In case of application submitted by the

Stock-dealer or the Merchant Banker’s own portfolio, the application amount should also be

transferred to the “Public Issue Application Account”;

c) instruct the banker to block the account for an amount equivalent to the aggregate application

money and to issue a certificate in this regard.

4. Banker of the Stockbroker/Merchant Banker shall block the account as requested for, issue a

certificate confirming the same and handover it to the respective Stockbroker/Merchant Banker.


19

5. For Non-resident Bangladeshi (NRB) and Foreign applicants, the Stockbroker/Merchant Banker shall

prepare a list containing the draft information against the respective applicant’s particulars.

6. The Stockbroker/Merchant Banker shall prepare category wise lists of the applicants containing

Customer ID, Name, BO Account Number and Number of Securities applied for, and within 03

(three) working days from the cut-off date, send to the respective Exchange, the lists of applicants in

electronic (text format with tilde ‘~’ separator) format, the certificate(s) issued by its banker, the

drafts received from Non-resident Bangladeshi (NRB) and Foreign applicants and a copy of the list

containing the draft information.

7. On the next working day, the Exchanges shall provide the Issuer with the information received from

the Stockbroker/Merchant Bankers, the drafts submitted by Non-resident Bangladeshi (NRB) and

Foreign applicants and the list containing the draft information. Exchanges shall verify and preserve

the bankers’ certificates in their custody.

8. The application/buy instructions shall be preserved by the Stockbroker/Merchant Bankers up to 6

months from listing of the securities with exchange.

Step-3 (Issuer)

9. The Issuer shall prepare consolidated list of the applications and send the applicants’ BOIDs in

electronic (text) format in a CDROM to CDBL for verification. The Issuer shall post the consolidated

list of applicants on its website and websites of the Exchanges. CDBL shall verify the BOIDs as to

whether the BO accounts of the applicants are active or not.

10. On the next working day, CDBL shall provide the Issuer with an updated database of the applicants

containing BO Account Number, Name, Addresses, Parents’ Name, Joint Account and Bank Account

information along with the verification report.

11. After receiving verification report and information from CDBL, the Issuer shall scrutinize the

applications, prepare category wise consolidated lists of valid and invalid applications and submit

report of final status of subscription to the Commission and the Exchanges within 10 (ten) working

days from the date of receiving information from the Exchanges.

12. The Issuer and the issue manager shall conduct category wise lottery with the valid applications

within 03 (three) working days from the date of reporting to the Commission and the Exchanges, if

do not receive any observation from the Commission or the Exchanges.

13. The Issuer and issue manager shall arrange posting the lottery result on their websites within 06 (six)

hours and on the websites of the Commission and Exchanges within 12 (twelve) hours of lottery.

14. Within 02 (two) working days of conducting lottery, the Issuer shall:

a) send category wise lists of the successful and unsuccessful applicants in electronic (text

format with tilde ‘~’ separator) format to the respective Exchange.

b) send category wise lists of unsuccessful applicants who are subject to penal provisions as

per conditions of the Consent Letter issued by the Commission in electronic (text format

with tilde ‘~’ separator) format to the Commission and Exchanges mentioning the penalty

amount against each applicant.

c) issue allotment letters in the names of successful applicants in electronic format with digital

signatures and send those to respective Exchange in electronic form.

d) send consolidated allotment data (BOID and number of securities) in electronic text format

in a CDROM to CDBL to credit the allotted shares to the respective BO accounts.



20

15. On the next working day, Exchanges shall distribute the information and allotment letters to the

Stockbroker/Merchant Bankers concerned in electronic format and instruct them to:

a) remit the amount of successful (other than NRB and Foreign) applicants to the Issuer’s

respective Escrow Account opened for subscription purpose, and unblock the amount of

unsuccessful applicants;

b) send the penalty amount of other than NRB and Foreign applicants who are subject to penal

provisions to the Issuer’s respective Escrow Accounts along with a list and unblock the balance

application money;

16. On the next working day of receiving the documents from the Exchanges, the

Stockbrokers/Merchant Banker shall request its banker to:

a) release the amount blocked for unsuccessful (other than NRB and foreign) applicants;

b) remit the aggregate amount of successful applicants and the penalty amount of unsuccessful

applicants (other than NRB and foreign) who are subject to penal provisions to the respective

‘Escrow’ accounts of the Issuer opened for subscription purpose.

17. On the next working day of receiving request from the Stockbrokers/Merchant Bankers, their

bankers shall unblock the amount blocked in the account(s) and remit the amount as requested for

to the Issuer’s ‘Escrow’ account.

18. Simultaneously, the stockbrokers/Merchant Bankers shall release the application money blocked in

the customer accounts; inform the successful applicants about allotment of securities and the

unsuccessful applicants about releasing their blocked amounts and send documents to the Exchange

evidencing details of the remittances made to the respective ‘Escrow’ accounts of the Issuer. The

unblocked amounts of unsuccessful applicants shall be placed as per their instructions. The

Stockbroker/Merchant Banker shall be entitled to recover the withdrawal charges, if any, from the

applicant who wants to withdraw the application money, up to an amount of Tk. 5.00 (five) per

withdrawal.

19. All drafts submitted by NRB or Foreign applicants shall be deposited in the Issuer’s respective

‘Escrow’ accounts and refund shall be made by the Issuer by refund warrants through concerned

stockbroker or merchant banker or transfer to the applicant’s bank account through banking channel

within 10 (ten) working days from the date of lottery.

Miscellaneous:

20. The Issuer, Issue Manager(s), Stockbrokers and Merchant Bankers shall ensure compliance of the

above.

21. The bank drafts (FDD) shall be issued considering TT Clean exchange rate of Sonali Bank Ltd. on the

date of publication of abridged version of prospectus.

22. Amount deposited and blocked in the “Public Issue Application Account” shall not be withdrawn or

transferred during the blocking period. Amount deposited by the applicants shall not be used by the

Stockbrokers/Merchant Bankers for any purpose other than public issue application.

23. The Issuer shall pay the costs related to data transmission, if claimed by the Exchange concerned up

to an amount of Tk.2,00,000.00 (taka two lac) for a public issue.

24. The Stockbroker/Merchant Bankers shall be entitled to a service charge of Tk.5.00 (taka five) only per

application irrespective of the amount or category. The service charge shall be paid by the applicant

at the time of submitting application.

25. The Stockbroker/Merchant Banker shall provide the Issuer with a statement of the remittance and

drafts sent.


21

26. The Issuer shall accumulate the penalty amount recovered and send it to the Commission through a

bank draft/payment order issued in favor of the Bangladesh Securities and Exchange Commission.

27. The concerned Exchange are authorized to settle any complaints and take necessary actions against

any Stockbroker/Merchant Banker in case of violation of any provision of the public issue application

process with intimation to the Commission.

PART–C

1. The issue manager shall carefully examine and compare the published prospectus and its abridged

version on the date of publication with the copies vetted by the Commission. If any discrepancy is found,

both the issuer and the issue manager shall jointly publish a corrigendum immediately in the same

newspapers concerned, simultaneously endorsing copies thereof to the Commission and the stock

exchanges concerned. In this regard, the issue manager shall submit a compliance report to the

Commission within 5 working days from the date of such publications.

2. The fund collected through Public Offering shall not be utilized prior to listing with Exchange(s) and that

utilization of the said fund shall be effected through banking channel, i.e. through account payee cheque,

pay order or bank drafts etc.

3. The company shall furnish status report on utilization of Public Offering proceeds audited by foreign

affiliated auditors and authenticated by the board of directors to the Commission and the Exchanges

within 15 (Fifteen) days of the closing of each month until such fund is fully utilized, as mentioned in

the schedule contained in the prospectus. The issuer shall simultaneously post the status report in its

website and Exchanges shall also post the same in company information contained in websites of the

Exchanges. In the event of any irregularity or inconsistency, the Commission may employ or engage

any person to examine whether the issuer has utilized the proceeds for the purpose disclosed in the

prospectus.

4. While auditing the utilization of IPO proceeds, the auditors will perform their jobs under the following

terms of reference (TOR) and confirm the same in their report/certificate:

(a) Whether IPO proceeds have been utilized for the purposes/heads as specified in the

prospectus;

(b) Whether IPO proceeds have been utilized in line with the condition (if any) of the

Commission’s consent letter;

(c) Whether utilization of IPO proceeds have been completed within the time

schedule/implementation schedule as specified in the published prospectus;

(d) Whether utilization of IPO proceeds is accurate and for the purpose of the company as

mentioned/specified in the published prospectus; and

(e) The auditors should also confirm that:(i)assets have been procured/imported/constructed

maintaining proper/required procedure as well as at reasonable price; and (ii) auditors’

report has been made on verification of all necessary documents/papers/vouchers in

support of IPO proceeds making reconciliation with Bank Statement.

5. All transactions, excluding petty cash expenses, shall be effected by crossed cheques or bank transfers.

6. Proceeds of the public offering shall not be transferred to any other bank account before listing with the

Exchange(s). The proceeds shall not be used for any purpose other than those specified in the prospectus

without any valid ground. Any deviation in respect of time or purpose of utilization must have prior

approval of the shareholders in the general meeting and if approved by the shareholders, the meeting

resolution shall be submitted to the Commission and the Exchanges along with reasonable explanations.


22

7. If any quarter or half-year of the financial year ends after publication of the abridged version of

prospectus and before listing of its securities with any exchange, the company shall

disseminate/transmit/submit the said quarterly/half yearly financial statements in accordance with the

Commission’s Notification SEC/CMRRCD/2008-183/admin/03-34 dated September 27, 2009 and Rules 13

of the Securities and Exchange Rules, 1987.

8. In the event of arising issues concerning Price Sensitive Information as defined under the wmwKDwiwUR I

G·‡PÄ Kwgkb (myweav‡fvMx e¨emv wbwl×KiY) wewagvjv 1995 after publication of the abridged version of prospectus

and before listing of its securities with any exchange, the company shall disseminate/transmit/submit the

information as price sensitive in accordance with the Commission’s Notification No. SEC/SRMI/200-

953/1950 dated October 24, 2000.

PART-D

1. As per provision of the Depository Act, 1999 & Regulations made thereunder, shares will only be issued in

dematerialized condition. All transfer/transmission/splitting will take place in the depository system of

Central Depository Bangladesh Ltd. (CDBL) and any further issuance of shares (including rights/bonus) will

be made in dematerialized form only.

2. The issuer and the issue manager shall ensure due compliance of all the above conditions, the

‘Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015’ and the listing regulations of

the Exchanges.

3. The Commission may impose further conditions/restrictions etc. from time to time as and when

considered necessary which shall also be binding upon the issuer company.


23

SECTION (III): DECLARATION AND DUE DILIGENCE CERTIFICATES

DECLARATION ABOUT THE RESPONSIBILITY OF THE DIRECTORS, INCLUDING THE CEO OF THE ISSUER IN

RESPECT OF THE PROSPECTUS

[Rule 4(1)(d)]

This prospectus has been prepared, seen and approved by us, and we, individually and collectively, accept full

responsibility for the authenticity, accuracy and adequacy of the statements made, information given in the

prospectus, documents, financial statements, exhibits, annexes, papers submitted to the Commission in

support thereof, and confirm, after making all reasonable inquiries that all conditions concerning this public

issue and prospectus have been met and that there are no other information or documents, the omission of

which make any information or statements therein misleading for which the Commission may take any civil,

criminal or administrative actions against any or all of us as it may deem fit.

We also confirm that full and fair disclosures have been made in this prospectus to enable the investors to

make a well informed decision for investment.

Sd/-

Kao Wen Fu

Managing Director& Director

Date: May 10, 2016

Sd/-

Chung Wen Kuei

Chairman & Director

Date: May 10, 2016

Sd/-

Yang Ming Te

Representative of Eternal Flame Int’l Co. Inc

Date: May 10, 2016

Sd/-

Lin Chih-Wen

Representative of Ever Priority Ltd

Date: May 10, 2016

Sd/-

Md. Monzur Alam Khan

Independent Director

Date: May 10, 2016

Statement regarding any material change including raising of paid-up capital after the date of Audited

Financial Statements

Date: 23 September 2016

This is to certify that, “Shepherd Industries Limited” has not made any material change including raising of

paid up capital after the date of Audited Financial Statements (30 June 2016) as included in the prospectus.

Sd/- Sd/-

(Md. Ataur Rahman)


(Kao Wen Fu)

Managing Director


24

DUE DILIGENCE CERTIFICATE BY ISSUE MANAGER(S)

[Rule 4(1)(d)]

To

The Bangladesh Securities and Exchange Commission

Sub: Public Issue of 20,000,000 Ordinary Shares of Tk. 200,000,000.00 by Shepherd Industries Limited.

Dear Sir,

We, the issue manager to the above-mentioned forthcoming issue, state and confirm as follows: (1) We have examined all the documents submitted with the application for the above mentioned public

issue, visited the premises of the issuer and interviewed the Chairperson, Directors and key management

personnel of the issuer in connection with the finalization of the prospectus pertaining to the said issue;

(2) On the basis of such examination and the discussions with the directors, officers and auditors of the

issuer, other agencies, independent verification of the statements concerning objects of the issue and

the contents of the documents and other materials furnished by the issuer.

WE CONFIRM THAT: (a) The prospectus filed with the Commission is in conformity with the documents, materials and papers

relevant to the issue;

(b) All the legal requirements relating to the issue as also in the rules, notification, guidelines, instructions,

etc. framed/issued by the Commission, other competent authorities in this behalf and the Government have been duly complied with;

(c) The disclosures made in prospectus are true, fair and adequate to enable the investors to make a well

informed decision for investment in the proposed issue and such disclosures are in accordance with the requirements of the Companies Act, 1994, the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015 and other applicable laws;

(d) Besides ourselves, all the intermediaries named in the prospectus are registered with the Commission

and that till date such registrations are valid;

(e) We have satisfied ourselves about the capability of the underwriters to fulfill their underwriting

commitments;

(f) The proposed activities of the issuer for which the funds are being raised in the present issue fall within

the ‘main objects’ listed in the object clause of the Memorandum of Association or other charter of the issuer and that the activities which have been carried out till now are valid in terms of the object clause of its Memorandum of Association;

(g) Necessary arrangements have been made to ensure that the moneys to be received pursuant to the issue shall be kept in a separate bank account and shall be used for the purposes disclosed in the use of proceeds section of the prospectus;

(h) All the applicable disclosures mandated in the Bangladesh Securities and Exchange Commission (Public

Issue) Rules, 2015 have been made in addition to other disclosures which, in our view, are fair and adequate to enable the investor to make a well informed decision;

(i) We enclose a note explaining how the process of due diligence has been exercised by us in view of the nature of current business background or the issuer, situation at which the proposed business stands, the risk factors, sponsors experiences etc. We also confirm that the due diligence related process, documents and approval memos shall be kept in record by us for the next 5 (five) years after the IPO for any further inspection by the Commission;

(j) We enclose a checklist confirming rule-wise compliance with the applicable provisions of the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015 containing details such as the rule


25

number, its text, the status of compliance, page numbers of the prospectus where the rules has been complied with and our comments, if any;

(k) We also declare that we have managed the public issue of following issuers in the last 05 (five) years:

Serial.

No. Name of the Issue Month/Year

Issue

Price (Tk.)

Dividend Payment History

Cash Bonus

1 Mozaffar Hossain Spinning Mills

Limited September/2013 10.00

-

-

25% 2014,

20% 2015*

2 Hwa Well Textiles (BD) Ltd. April/2014 10.00 15% , 2014

15%, 2015 -

3 Ifad Autos Limited June/2014 30.00 7%, 2015 30% 2015

*15% Stock Dividend for the year ended on June 30, 2015 has been credited to all the shareholders' respective BO accounts

through CDBL system as per Order dated 17.01.2016 passed by the Hon'ble High Court Division of the Supreme Court of

Bangladesh in Writ Petition No. 447/2016. The Court did not provide any Decision regarding the remaining 5% dividend

yet.

Sd/-

Noor Ahamed, FCA

Place: Dhaka CEO & Managing Director

Date: May 10, 2016 Alpha Capital Management Limited


26

DUE DILIGENCE CERTIFICATE BY THE UNDERWRITER(S)

[Rule 4(1)(d)]

To

The Bangladesh Securities and Exchange Commission

Sub: Public offer of 20,000,000 Ordinary Shares of Tk. 10.00 of Shepherd Industries Limited

Dear Sir,

We, the under-noted Underwriter(s) to the above-mentioned forthcoming issue, state individually and

collectively as follows:

(1) We, while underwriting the above mentioned issue on a firm commitment basis, have examined the draft

prospectus, other documents and materials as relevant to our underwriting decision; and

(2) On the basis of such examination and the discussions with the issuer company, its directors and officers,

and other agencies, independent verification of the statements concerning objects of the issue and the

contents of the documents and other materials furnished by the issuer company.

WE CONFIRM THAT:

(a) We are registered with the Bangladesh Securities and Exchange Commission as a merchant banker and

eligible to carry out the underwriting activities. Our present paid-up capital stands at Tk. 255,500,000 (Twenty

five crore and Fifty Five Lac) and we have the capacity to underwrite a total amount of Tk. 1,277,500,000 (One

hundred twenty Seven crore Seventy Fifty Lac) as per relevant legal requirements. We have committed to

underwrite for up to Tk. 70,000,000 (Seven crore) for the upcoming issue.

(b) At present, the following underwriting obligations are pending for us:

Sl Name of the issue Amount underwritten (Tk.)

i) IDLC Finance Limited 30,000,000

ii) GPH Ispat Limited 262,500,000

iii) BD Thai Aluminium Ltd. 30,000,000

iv) Fortune Shoes Limited 14,000,000

Total 406,500,000

(c) All information as are relevant to our underwriting decision have been received by us and the draft

prospectus forwarded to the Commission has been approved by us;

(d) We shall subscribe and take up the un-subscribed securities against the above-mentioned public issue

within 15 (fifteen) days of calling up thereof by the issuer; and

(e) This underwriting commitment is unequivocal and irrevocable.

For the Underwriter:

Sd/-

Noor Ahamed, FCA

CEO & Managing Director

Alpha Capital Management Ltd

Date: May 10, 2016


27

SECTION: (IV): ABOUT THE ISSUER

Particulars Description

Name of the issuer : Shepherd Industries Limited

Dates of incorporation : Shepherd Industries Limited was incorporated as a private

limited company on August 21, 2000 under the Companies

Act 1994 with the registrar of Joint Stock companies and

Firms, Bangladesh vide registration no: C-

401066(425)/2000 and was subsequently converted in to a

public limited company on June 08, 2015. Shepherd

Industries Limited was amalgamated by the scheme of

amalgamation with Shepherd Yarn Limited by the order of

the Honorable High Court of The Supreme Court of

Bangladesh dated December 15, 2014; with effect from

April 01, 2015.

Commencement of its commercial

operations

: October 18, 2001.

Logo :

Addresses of its registered office : House # 24, Road # 04, Sector #4, Uttara Model Town,

Dhaka-1230

Other offices and plants (Factory) : Bagrapara, Kathalia, Bhaluka, Mymensingh

Telephone number : +88-02-7913340-42

Fax number : +88-02-7913359-60

Contact person : Md. Ataur Rahman, Chief Financial Officer

Website address : www.shepherdbd.com

E-mail address : [email protected]

b) The names of the sponsors and directors of the issuer:

Sponsors:

Sl. Name Present Status in the company Remarks

1 Mr. Chen Kuo Kung Resigned and left the company Transferred his entire shares

2 Mr. Mafiz Ahmed Bhuyian Resigned and left the company Transferred his entire shares

3 A.K.M Zakir Hossain Resigned and left the company Transferred his entire shares

4 Mr. Cheng Che Seng Shareholder Resigned from the post of director

5 Mr. Yang Ming Te Shareholder and representative of

Eternal Flame Int’l. Co. Inc.

6 Ms Chiu Ching Ping Resigned and left the company Transferred her entire shares

Directors:

Sl. No. Directors

1 Mr. Kao Wen Fu, Managing Director

2 Eternal Flame Int’l. Co. Inc (Represented by Mr. Yang Ming Te), Director

3 Ever Priority Ltd. (Represented by Lin Chih-Wen), Director

4 Chung Wen Kuei, Chairman

5 Mr. Md Monzur Alam Khan, Independent Director


(c) The name, logo and address of the auditors along with their telephone numbers, fax numbers, contact

persons, website and e-mail addresses:


Name : MAHFEL HUQ & CO.

Logo :

Address : BGIC Tower (4

th Floor), 34, Topkhana Road Dhaka-1000.

Telephone number : +88-02-7171316, +88-02-9553143

Fax numbers : +88-02-9571005

Contact person : Abdul Kayum Akhunjee, Manager

Website address : www.mahfelhuq.com

E-mail address : [email protected]

(d) The name(s) of the stock exchanges where the specified securities are proposed to be listed.

Stock

Exchanges

DHAKA STOCK EXCHANGE LIMITED

9/F Motijheel C/A, Dhaka 1000.

Tel: +88-02-9564601, 9576210-18

Fax: +88-02-9564727, +88-02-9569755

CHITTAGONG STOCK EXCHANGE LTD.

CSE Building, 1080, Sheikh Mujib Road Chittagong

4100.

Tel: +880-2-9513911-15

Fax: +880-2-9513906


29

SECTION (V): CORPORATE DIRECTORY OF THE ISSUER

Company Name : Shepherd Industries Limited

Logo :

Legal Position :

Shepherd Industries Limited was incorporated as a private limited

company on August 21, 2000 under the Companies Act 1994 with the

registrar of Joint Stock companies and Firms, Bangladesh vide registration

no: C-401066(425)/2000 and was subsequently converted in to a public

limited company on June 08, 2015. Shepherd Industries Limited was

amalgamated by the scheme of amalgamation with Shepherd Yarn Limited

by the order of the Honorable High Court of The Supreme Court of

Bangladesh dated December 15, 2014; with effect from April 01, 2015.

Incorporation & Reg. No. : August 21, 2000& C-41066(425)/2000.

Commencement of

Commercial Production : October 18, 2001.

Authorized Capital Tk. 1,900,000,000 divided into 190,000,000 ordinary shares of tk. 10.00

each

Paid up Capital Tk. 1,042,059,860 divided into 104,205,986 ordinary shares of tk. 10.00

each

Registered office

House # 24, Road # 04, Sector #4, Uttara Model Town, Dhaka-1230

Telephone: +88-02-7913340-42, Fax: +88-02-7913359-60

Web: www.shepherdbd.com

Email: [email protected]

Factory :

Bagrapara, Kathalia, Bhaluka, Mymensingh

Telephone: 09022-56122, 56124-25, 56127,56142

Fax: 09022-56126, 56288, 56105

Board of Directors : 5 Directors

Auditor :

MAHFEL HUQ & CO.


BGIC Tower (4th Floor)


Tax Consultant :

Md. Delwar Hossain, ITP

Commissioner of Taxes (Retired)

House#32, Road # 4, Block # D, Banasree Project, Rampura

Dhaka-1219

Mobile: +88-01715-161172

Legal Advisor :

Podder & Associates

6/A/1 Segun Bagicha (ground floor)

Topkhana Road,Dhaka-1000

Mobile: 01819-286959

Banker for IPO : IFIC Bank Limited

Banker of the Company :

IFIC Bank Limited

Trust Bank Limited

Southeast Bank Limited

Compliance officer : Mr. Mohammed Abu Zafar, Company Secretary


30

SECTION (VI): DESCRIPTION OF THE ISSUER

(a) Summary:

(i) The summary of the industry and business environment of the issuer

Dyeing is the process of adding color to textile products like fibers, yarns, and fabrics. Dyeing is normally

done in a special solution containing dyes and particular chemical material. After dyeing,

dye molecules have uncut chemical bond with fiber molecules. The temperature and time controlling are

two key factors in dyeing.

Bangladesh is one of the largest producers of textiles and garments products. Abundant availability of

raw materials and cheap labor has made the country a sourcing hub. With the improvement of the

Textile & RMG sector in Bangladesh a lot of backward linkage industries have been established to support

the Textile & RMG sector. Dyeing industry is one of the most important backward linkage industries for

the Textile & RMG sector, the demand of which is increasing day by day considering the development of

the Textile & RMG sector.

Business environment:

The Issuer’s business environment is conducive to the business as we have good supply of raw materials

and cheap labour. Labour has become skilled over the period. Moreover, favorable government policy

towards the export oriented sector has created business friendly situation.

(ii) Summary of consolidated financial, operating and other information.

This information is not applicable for the issuer since it has no subsidiary or associate company.


31

(b) General Information:

(i) Name and address, telephone and fax numbers of the registered office, corporate head office, other

offices, factory, business premises and outlets of the issuer;


Name and Address of the

registered office


House # 24, Road # 4, Sector # 04, Uttara Model Town, Dhaka-

1230

Corporate head office Shepherd Industries Limited

House # 24, Road # 4, Sector # 04, Uttara Model Town, Dhaka-

1230

Telephone and fax numbers of the

registered/corporate office

Telephone: +88-02-7913340-42

Fax: +88-02-7913359-60

Factory Bagrapara, Kathalia, Bhaluka, Mymensingh

Telephone and fax numbers of the

factory

Telephone: 09022-56122,56124-25,56127,56142

FAX: 09022-56126,56288,56105

Outlets of the issuer As 100% export oriented industry, we have no outlets.

Other Offices No other offices

(ii) The board of directors of the issuer;

Sl Board of Directors Designation

1 Chung Wen Kuei Chairman & Director

2 Mr. Kao Wen Fu Managing Director & Director

3 Mr. Yang Ming Te Representative: Eternal Flame Int’l Co. Inc Director

4 Mr. Lin Chih-Wen, Representative: Ever Priority Ltd. Director

5 Mr. Md Monzur Alam Khan (Barrister-at-Law) Independent Director


Page | 32

(iii) Names, addresses, telephone numbers, fax numbers and e-mail addresses of the chairman, managing director, whole time directors, etc. of the issuer;

Sl.

No. Name Designation

Address Telephone & fax

numbers E-mail address

Foreign Address Local Address

1 Chung Wen Kuei Chairman &

Director

167 Dingcheng 3rd

St. Xindia Dist.

New Taipei City 23153, Taiwan

(R.O.C).


House # 24, Road # 4, Sector

# 4, Uttara, Dhaka-1230

Tel: +88-02-

7913340-42

Fax: +88-02-

7913359-60

mark.chung@shepherd-

group.com.tw

2 Mr. Kao Wen Fu Managing Director

& Director

4-FL-1, 250, Sec-4, Chung Hsiau, E,

RD. Taipei, Taiwan.

[email protected]

3 Mr. Yang Ming Te

Representative: Eternal

Flame Int’l Co. Inc

Director 4-FL-1, 250, Sec-4, Chung Hsiabu

Br. Taipei, Taiwan

[email protected]

4 Mr. Lin Chih-Wen,

Representative: Ever Priority

Ltd.

Director 6F-1, No. 538,Sec-4, Chung Yang,

N.RD, Taipei, Taiwan

[email protected]

5 Md. Monzur Alam Khan Independent

Director -

Suite No. 12/09 & 12/10 (12th

Floor), Eastern Commercial

complex, 73 Kakrail, Dhaka-

1000

Tel: +88-02-

9338437

[email protected]

(iv) Names, addresses, telephone numbers, fax numbers and e-mail addresses of the CFO, company secretary, legal advisor, auditors and compliance officer;

Sl No Names Designation Address Telephone Number Fax number E-mail addresses

1 Mr. Ataur Rahman Chief Financial Officer House # 24, Road # 4, Sector # 04, Uttara

Model Town, Dhaka-1230. +88-02-7913340-42

+88-02-

7913359-60

[email protected]

2 Mohammed Abu Zafar Company Secretary [email protected]

3 Mahfel Huq & Co.


Auditors BGIC Tower (4th

Floor)


+88-02-7171316, +88-

02-9553143

+88-02-

9571005 [email protected]

4 Podder & Associates Legal Advisor 6/A/1, (Ground Floor), Topkhana road,

Segun Bagicha, Dhaka-1000 Mob: 01819-286959 - [email protected]

5 Mohammed Abu Zafar Compliance Officer

House # 24, Road # 4, Sector # 04, Uttara

Model Town, Dhaka-1230. +88-02-7913340-42

+88-02-

7913359-60 [email protected]


33

(v) Names, addresses, telephone numbers, fax numbers, contact person, website addresses and e-mail addresses of the issue manager(s);

Name Address Telephone Number Fax Number Contact Person Website Address E-mail Address

Alpha Capital

Management

Limited

Eastern Arzoo Complex

(7th Floor), 61 Bijoynagar,

Dhaka-1000

+88-02-8313947, 8316519,

8316540;

+88-02-8316547 Noor Ahamed, FCA


www.acmlbd.com [email protected]

(vi) Details of Credit Rating:

The company is issuing shares at par. As such no credit rating is required.

(vii) Following details of underwriter:

a) The names, addresses, telephone numbers, fax numbers, contact persons and e-mail addresses of the underwriters and the amount underwritten by them;

Names Address

Contact Person Telephone & Fax Number and E-mail address Amount

Underwritten

Alpha Capital Management

Limited


Floor), 61 Bijoynagar, Dhaka-

1000

Noor Ahamed, FCA


Tel: +88-02-8316540, 8313947, 8316519; Fax: +88-02-8316547

E-mail: [email protected]; Web: www.acmlbd.com

70,000,000


Prospectus: Shepherd Industries Limited Page | 34

b) Declaration by the underwriters that they have sufficient resources as per the regulatory requirements to

discharge their respective obligations;

Declaration by Alpha Capital Management Limited

We the underwriter(s) have sufficient resources as per the regulatory requirements to discharge our

respective obligations.

Place: Dhaka

Date: September 23, 2016

Sd/-

Noor Ahamed FCA


Alpha Capital Management Limited

c) Major terms and conditions of the underwriting agreements.

(i) The IPO shall stand cancelled if at least 65% in any category of the IPO is not subscribed.

(ii) In case of under subscription in any category by up to 35% of the IPO the under-subscribed securities shall

be taken up by the underwriters.

(iii) Notwithstanding anything contained in the agreement in case of inconsistency between the provision of

the agreement and the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015, the

Public Issue Rules shall prevail.

(iv) Prior to publication of the prospectus, the Company shall have obtained consent from the Bangladesh

Securities and Exchange Commission permitting the issue as described in Article 2.01 and providing for

payment of underwriting commission 1% (One percent)on the amount underwritten.

(v) If and to the extent that the shares offered to the public by a Prospectus authorized hereunder shall not

have been subscribed and paid for in cash in full by the Closing Date, the Company shall within 10

(ten)days of the closure of subscription call upon the underwriters in writing with a copy of the said

writing to the Bangladesh Securities and Exchange Commission, to subscribe the shares not so subscribed

by the closing date and to pay for in cash in full, inclusive of any premium if applicable, for such

unsubscribed shares within 15 (fifteen)days after being called upon to do so. The amount so received shall

be credited to the share subscription account of the Company within the said period. If payment is made

by Cheque/Bank Draft by the Underwriter, it will be deemed that the Underwriter has not fulfilled his

obligation towards his underwriting commitment under this Agreement, until such time as the

Cheque/Bank Draft has been encashed and the Company’s share subscription account credited.

In any case within 7 (seven) days after the expiry of the aforesaid 15 (fifteen) days, the Company shall

send proof of subscription and payment by the Underwriters to the Commission.

In the case of failure by the underwriter to pay for the shares within the stipulated time, the

Company/Issuer will be under no obligation to pay any underwriting commission under this Agreement.



(c) Capital Structure:

(i) Authorized, issued, subscribed and paid up capital (number and class of securities, allotment

dates, nominal price, issue price and form of consideration);

Particulars No. of Ordinary Shares Nominal

price Issue price Amount in Taka

Before IPO:

Authorized Capital 190,000,000 10 10 1,900,000,000

Issued, Subscribed and Paid up capital 104,205,986 10 10 1,042,059,860

Total paid up capital before IPO (A) 104,205,986 10 10 1,042,059,860

After IPO:

To be issued as IPO (B) 20,000,000 10 10 200,000,000

Paid up capital (Post IPO) (A+B) 124,205,986 10 10 1,242,059,860

The Company has raised its paid-up capital in following phases:

Particulars Date Consideration No of Ordinary

Shares

Amount Tk.

Cash Other than cash

MOA and AOA 01/08/2000 60,600 - 60,600 606,000

1st Allotment 01/07/2002 7,939,400 - 7,939,400 79,394,000

2nd Allotment 12/11/2011 857,400 - 857,400 8,574,000

3rd Allotment (Through

Amalgamation with


01/04/2015 - 10,262,000 10,262,000 102,620,000

4th Allotment 14/02/2016 85,086,586 - 85,086,586 850,865,860

Total 104,205,986 1,042,059,860

*Face value of company’s share was Tk. 100/- each and was converted in to Tk. 10/- vide EGM dated June

08, 2015; Face value of shares on the above table was considered at Tk. 10/- for betterpresentation.

(ii) Size of the present issue, with break-up (number of securities, description, nominal value and

issue amount);

Particulars/Description

% No of Ordinary

Shares

Nominal

Value per

share

Issue

Price

Total Amount

in BDT

Initial Public

Offering

Under Fixed

Price

Method

For EIS Mutual

Funds

10% 2,000,000 10 10 20,000,000

Other EIs 40% 8,000,000 80,000,000

For General

Public

NRB 10% 2,000,000 20,000,000

Others* 40% 8,000,000 80,000,000

Total 100% 20,000,000 200,000,000

Others*: 8,000,000 ordinary shares will be reserved for general public and Small Affected Investors.

(iii) Paid up capital before and after the present issue, after conversion of convertible instruments (if

any) and share premium account (before and after the issue);

Particulars Amount in Tk.

Paid up capital before the present issue 1,042,059,860

Paid up capital after the present issue 1,242,059,860

Paid up capital after conversion of convertible instruments (if any) No convertible

Instrument

Share premium account before the present issue No share premium

account Share premium account after the present issue

*The Company has no convertible instruments and share premium account.



(iv) Category wise shareholding structure with percentage before and after the present issue and

after conversion of convertible instruments (if any);

Ca

teg

ory

Sl Name Position Date of

Acquisition No of Shares Total

Percentage

*Lock-in

Period Pre-IPO Post-

IPO

Dir

ect

or

or

Sp

on

sors

1 Yang Ming TE Sponsor MOA 10,000

1,320,000 1.27% 1.063% 3 Years 01/07/2002 1,310,000

2 Kao Wen FU

Managing

Director&

Shareholder

01/07/2002 1,310,000

3,717,549 3.57% 2.99% 3 Years 28/09/2000 10,000

01/04/2015 1,780,660

14/02/2016 616,889

3 Ever Priority Ltd Director

26/09/2013 1,320,000

43,035,650 41.30% 34.65% 3 Years 26/07/2009

200,000

1,160,000

1,360,000

01/04/2015 6,640,000

14/02/2016 32,355,650

4 Mr. Cheng Che

Seng Sponsor

MOA 10,000

1,720,680 1.65% 1.39% 3 Years 01/07/2002 1,310,000

01/04/2015 400,680

5 Mr. Chung Wen

Kuei Chairman

12/11/2011 857,400

3,261,415 3.13% 2.63% 3 Years 01/04/2015 1,440,000

14/02/2016 964,015

6 Eternal Flame

International Director

17/05/2015 100 10,886,580 10.45% 8.76% 3 Years

14/02/2016 10,886,480

Oth

er

Th

an

Dir

ect

or

or

Sp

on

sor

1 Mr. Seng Ming

Hsiung Shareholder 01/04/2015 560 560 0.00% 0.00% 1 Year

2 CHANG, HUNG-

JUNG Shareholder 14/02/2016 250,000 250,000 0.24% 0.20% 1 Year

3 CHANG, SHIH-LIN Shareholder 14/02/2016 903,500 903,500 0.87% 0.73% 1 Year

4 CHANG, SHU-LING Shareholder 14/02/2016 661,761 661,761 0.64% 0.53% 1 Year

5 CHEN HUANG,

LEE-BE Shareholder 14/02/2016 1,787,735 1,787,735 1.72% 1.44% 1 Year

6 CHEN XIAO YUAN Shareholder 14/02/2016 600,000 600,000 0.58% 0.48% 1 Year

7 CHEN, CHEN-YEN Shareholder 14/02/2016 3,209,115 3,209,115 3.08% 2.58% 1 Year

8 CHEN, SHU-FEN Shareholder 14/02/2016 1,400,000 1,400,000 1.34% 1.13% 1 Year

9 HUANG, CHENG-

FEI Shareholder 14/02/2016 1,632,456 1,632,456 1.57% 1.31% 1 Year

10 KAO CHI FU Shareholder 14/02/2016 300,000 300,000 0.29% 0.24% 1 Year

11 KAO, CHUN-CHE Shareholder 14/02/2016 1,807,001 1,807,001 1.73% 1.45% 1 Year

12 LEE KANGOK Shareholder 14/02/2016 2,000,000 2,000,000 1.92% 1.61% 1 Year

13 LEE, HUEI-CHUN Shareholder 14/02/2016 903,501 903,501 0.87% 0.73% 1 Year

14 LI, HS1NG-CHIEH Shareholder 14/02/2016 652,665 652,665 0.63% 0.53% 1 Year

15 LIANG, XIAOPING Shareholder 14/02/2016 1,050,000 1,050,000 1.01% 0.85% 1 Year

16 LIN, WEN-YU Shareholder 14/02/2016 3,974,048 3,974,048 3.81% 3.20% 1 Year

17 LIU SHUANG-

CHUAN , Shareholder 14/02/2016 2,500,000 2,500,000 2.40% 2.01% 1 Year

18 LIU, LIANG-CHING Shareholder 14/02/2016 700,000 700,000 0.67% 0.56% 1 Year

19 THITIPONG

APITANOTA Shareholder 14/02/2016 1,160,000 1,160,000 1.11% 0.93% 1 Year

20 TSENG YA FEN Shareholder 14/02/2016 2,428,750 2,428,750 2.33% 1.96% 1 Year

21 WANG CHUN TA Shareholder 14/02/2016 250,000 250,000 0.24% 0.20% 1 Year

22 YANG BO-CHEN Shareholder 14/02/2016 652,665 652,665 0.63% 0.53% 1 Year

23 YANG, WAN-

CHLTN Shareholder 14/02/2016 960,000 960,000 0.92% 0.77% 1 Year

24 YAO JIANZHONG Shareholder 14/02/2016 1,160,000 1,160,000 1.11% 0.93% 1 Year

25 YIN, SHIH-WEN Shareholder 14/02/2016 3,220,355 3,220,355 3.09% 2.59% 1 Year

26 MD.ABDUL

MANNAN Shareholder 14/02/2016 1,100,000 1,100,000 1.06% 0.89% 1 Year

27 ABU SALEH ABDUL

MUIZ Shareholder 14/02/2016 500,000 500,000 0.48% 0.40% 1 Year

28 A. H. ENTERPRISE Shareholder 14/02/2016 750,000 750,000 0.72% 0.60% 1 Year



29 SYEDA LULU

MUBIN Shareholder 14/02/2016 350,000 350,000 0.34% 0.28% 1 Year

30 NAHID

CHOWDHURY Shareholder 14/02/2016 500,000 500,000 0.48% 0.40% 1 Year

31 KONIKA KAISER Shareholder 14/02/2016 100,000 100,000 0.10% 0.08% 1 Year

32 Md. DELWAR

HOSSAIN Shareholder 14/02/2016 100,000 100,000 0.10% 0.08% 1 Year

33 AGRO

ATMOSPHERE LTD Shareholder 14/02/2016 750,000 750,000 0.72% 0.60% 1 Year

34 J. K. ENTERPRISE

LTD Shareholder 14/02/2016 850,000 850,000 0.82% 0.68% 1 Year

35 NADIA SHAH Shareholder 14/02/2016 600,000 600,000 0.58% 0.48% 1 Year

36 NUSRAT JAHAN

RIMI Shareholder 14/02/2016 300,000 300,000 0.29% 0.24% 1 Year

37 MOHAMMAD

ZULKER NAIM Shareholder 14/02/2016 200,000 200,000 0.19% 0.16% 1 Year

Total 104,205,986 104,205,986 100.00% 84%

*The Company did not convert any instrument as there is none.



(v) Where shares have been issued for consideration in other than cash at any point of time, details in a

separate table, indicating the date of issue, persons to whom those are issued, relationship with the

issuer, issue price, consideration and valuation thereof, reasons for the issue and whether any benefits

have been accrued to the issuer out of the issue;

The company did not issue any share for consideration in other than cash except the shares allotted

through amalgamation. A company named Shepherd Yarn Limited in 2005 was formed by the directors of

Shepherd Industries Limited with the same line of business. The management decided to amalgamate

both the companies to bring synergy, growth, to increase supply-chain power and to eliminate

competition within the common management, which ultimately helped to gain large market share in the

dying industry.

Sl. From

No. of Shares Total

Number of

Shares

Amount of Tk. Transferor

(SYL)

Transferee

(SIL)

1 Under Scheme of Amalgamation

with Shepherd Yarn Limited (1,026,200) 1,026,200 1,026,200 102,620,000

Total (1,026,200) 1,026,200 1,026,200 102,620,000

• Shares issued through amalgamation are as under:

Sl date

of

issue

persons to whom

shares are issued

relationship with the

issuer

Number of

Shares

Issue

Price

consideration valuat

ion

Reas

on

1

01

/04

/20

15

Kao Wen Fu Managing Director &

Director 178,066

10

0

In e

xch

an

ge

of

Ord

ina

ry

Sha

res

At

pa

r

Am

alg

am

ati

on

2 Cheng Che Seng Shareholder 40,068

3 Ever Priority Ltd. Shareholder 664,000

4 Chung Wen Kuei Chairman 144,000

5 Shen Ming Hsiung Shareholder 66

No benefit have been accrued to the issuer out of the Issue

(vi) Where shares have been allotted in terms of any merger, amalgamation or acquisition scheme, details of such

scheme and shares allotted;

The company issued shares in terms of amalgamation scheme. Shepherd Yarn Limited was amalgamated

with Shepherd Industries Limited in pursuant to Extra ordinary General Meeting dated: 26.06.2014, both

the companies applied for approval of the Honorable High Court Division of The Supreme Court of

Bangladesh which was approved on December 15, 2014 and the decision was adopted by the company on

April 01, 2015. As per direction of the approved scheme by the honorable high court, Shepherd Industries

Limited issued and allotted one new ordinary share with a face value of Tk. 100 per share for every one

share held with a face value of Tk. 100 by the shareholders of Shepherd Yarn Limited as purchase

consideration. Consequently, 1,026,200 numbers of ordinary shares were issued.



SCHEME OF AMALGAMATION:

1. PART-I GENERAL

This scheme of Amalgamation (hereinafter referred -to as the "Scheme") provides for the amalgamation of

Shepherd Yarn Limited (Transferor Company) with Shepherd Industries Limited pursuant to section 228 and

229 of the Companies Act, 1994 (the Act) and other related provisions of the Act.

In this Scheme, unless repugnant to the meaning or context thereof, the expressions used herein shall have

the following meanings:-

(a) "The Act" means the Companies Act, 1994 including any amendments hereto.

(b) "Appointed Date" means 31' July, 2014 or such other date as may be approved by the Hon'ble High Court

Division of the Supreme Court of Bangladesh or any other appropriate authority.

(c) "Assets" or "Undertakings" means- and includes all the undertakings, the entire business, all the properties

(whether movable or immovable, tangible or intangible) lands, buildings, plant and machinery, capital works in

progress, furniture, fixtures, office equipment, appliance, vehicles, other fixed assets, all stocks, investments of

all kinds (including shares, scraps, cash, balance with banks on any deposit or other accounts, financial assets,

leases, tenancies, contingents rights or benefits, agreements, contracts, powers, approvals, allotments,

authorities, permits, consents, quotas, rights, entitlements, licenses (industrial or otherwise) or any other

benefits, patents trademarks, copy rights and other intellectual property rights, rights to use and avail of

telephones, telexes, facsimiles, e-mail, internet connections and installations, utilities, electricity and other

service, all files, records, papers, manuals, programmers data, catalogues, sales and advertising materials and

other records, whether in Bangladesh or abroad.

(d) "Effective Date" or "Coming into effect of this Scheme" of Effectiveness of the Scheme" means the day on

which the certified copies of the order of the Hon'ble High Court Division of the Supreme Court of Bangladesh

under section 228 read with section 229 of the Companies Act sanctioning the scheme are filed with the

Registrar of Joint Stock Companies & Firms.

(e) "Transferee Company" means Shepherd Industries Limited, a Private company limited by shares,

incorporated under the relevant provisions of the Act and having its registered office at House No. 24, Road

No.04, Sector No.04, Uttara Model Town, Dhaka-1230.

(f) "Transferor Company" means Shepherd Yarn Limited, a private company limited by shares, incorporated

under the Act and having its office at House No. 24, Road No.04, Sector No.04, Uttara Model Town, Dhaka-

1230.

2. PART-II CAPITAL

The summary of share capital of Transferor company as of 30th

October, 2011 is as follows:-

(a) Authorized:10,00,000 Ordinary Shares of Tk. 100/- Tk. 10,00,00,000/-

(b) Issued, Subscribed and paid up:8,82,000 Ordinary Shares of Tk. 100.00 each Tk. 8,82,20,000/-

3. The summary of Share capital of Transferee Company as of 26th

July, 2013 is as follows:

(a) Authorized: 60,00,000 Ordinary Shares of Tk. 100/- Tk. 60,00,00,000/-

(b) Issued, Subscribed and paid up: 8,85,74,000 Ordinary Shares of Tk. 100/- each Tk. 8,85,74,000/-



4. TRANSFER AND VESTING

(a) With effect from the appointed date and subject to the terms of this Scheme, the entire business and

whole of the undertakings of the Transferor Company including all its properties and assets (whether movable

or immovable, tangible or intangible) of whatsoever nature, shall pursuant to Section 229(2) of the Act,

without any further act, instrument or deed, be and stand transferred to and vested in and/or be deemed to

have been and stand Transferred to and vested in the Transferee Company as a going concern so as to become

as and from the Appointed Date, a part and parcel of the assets, rights, title, interests and authorities of the

Transferee Company.

(b) Without prejudice to sub- Clause (a) as above, in respect of such of the assets or the undertaking as are

movable in nature or are otherwise capable of transfer by manual delivery or by endorsement and/or delivery,

the same may be so transferred by the Transferor Company; and upon such transfer become the property,

assets, rights, title, interest and authorities of the Transferee Company.

(c) All the license, permits, quotas, approvals, permissions, incentives, loans, subsidies, concessions, grants,

rights, claims, lease, tenancies and other benefits of privileges enjoyed or conferred upon or held or availed of

by and all rights and benefits that have accrued which may accrue to the Transferee Company shall, pursuant

to the provisions of Section 229(2) of the Act, without any further act, instrument or deed, be and stand

transferred to and vested in and available to the Transferee Company so as to become as and from the

Appointed Date the licenses, permits, quota, approvals, permissions incentives, loans, subsidies, concessions,

grants, rights, claims, leases, tenancies and other benefits or privileges of the transferee Company and shall

remain valid, effective and enforceable on the same terms and conditions to the extend permissible under law.

It is hereby clarified that all inter party transactions between any/or all of the Transferor Company and the

Transferee Company shall be considered as intra party transactions for all purposes from the Appointed Date.

(d) All the assets, rights, interest, license, permits, quotas, approvals, permissions, incentives, loans, subsidies,

concessions, grants, claims, leases, tenancies and other benefits or privileges enjoyed or conferred upon or

held or availed of by and all rights and benefits that have accrued, which may rue to the Transferor Company

after the Appointed Date and prior to the Effective Date in connection with or in relation to the Undertaking

shall, pursuant to the provisions of Section 22(2) of the Act, without any further instrument or deed, be and

stand transferred to and vested in or deemed have been transferred to and vested in and available to the

Transferee Company and shall remain valid, effective and enforceable on the same terms and conditions to the

extent permissible under law.

5. Upon the coming into effect of this Scheme and with effect from the Appointed Date:

(a) All secured and unsecured debts (whether in taka or in foreign Company) all liabilities, duties and

obligations of the Transferor Company along with any charge, encumbrance, lieu or security-thereon

(hereinafter referred to as the "said liabilities" shall pursuant to the provisions of Section 229(2) of the Act,

without any further act, instrument or deed, be and stand transferred to and vested in or deemed to have

been transferred to and vested loan, so as to become the debts, liabilities, duties and obligation of the

Transferee Company, and further that it shall not be necessary to obtain in the consent of any third party or

other persons who is a party to any contract or arrangement by virtue of such debts, liabilities, duties and

obligations have arisen in order to give effect to the provisions of this Clause. It is clarified that in so far as the

assets of the Transferor Company are concerned, the security or charge over such assets or any part thereof,

relating to any loans, debentures or borrowings of the Transferor Company, shall, without, any further act or

deed continue to relate such assets or any part thereof, after the Effective Date and shall not relate to or be

available as security in relation to any, or any part of the assets of the Transferee Company save to the extent

warranted by the terms of the existing security arrangements to which any of/or the Transferor Company and

the Transferee Company save to the extent warrant by the terms of the existing security arrangement to which



any of the Transferor Company and the Transferee Company are party, and consistent with the joint obligation

assumed by them under such arrangement.

(b) (i) All debentures, bonds, notes, or other debit securities of the Transferor Company, whether convertible

into shares or otherwise (hereinafter referred to as "the Transferor Company" Securities) shall, pursuant to the

Provisions of Section 229(2) of the Act, without any further act, instrument or deed become securities of

Transferee Company and all rights, powers, duties and obligations in relation thereto shall be and stand

transferred to and vested in or deemed to have been transferred to and vested in and shall be exercised by or

against the Transferee Company as if were the Transferor Company in respect of the Transferor Company

Securities so transferred.

(ii) Loans, advances and other obligations (including any guarantees, letter of credit or any other instruments

or arrangement which may give rise to contingent liabilities in any form) if any, due or which may at any time

in future become due between the Transferor Company and the Transferee Company shall stand discharged

and there shall no liabilities in that behalf on either party.

(iii) Any debentures or notes or other debt securities, if any, issued by the Transferor Company and held by the

Transferee Company, and vice versa, shall, unless sold or Transferred by the Transferor Company or the

Transferee Company, as the Effective date, and shall be of no legal effect and Transferor Company or the

Transferee Company, as the case may be, shall have no further obligation in that behalf.

(e) (i) Where any of the liabilities and obligations of the Transferor Company as on the Appointed Date

Transferred to the Transferee Company have been discharged by Effective Date, such discharge shall be

deemed to have been for and on account of the Transferee Company.

(ii) All loans raised and utilized and all debts, duties, undertakings, liabilities and obligations incurred or

undertaken by the Transferor Company in relation to or in connection with the undertaking after the

Appointed Date and prior to the Effective Date shall be deemed to have been raised, used, incurred or

underrated for and on behalf of the Transferee Company and to the extent they are outstanding on the

Effective Date, shall, upon coming into effect of this Scheme, pursuant to the provisions of Section 229 (2) of

the act, without any further act, instrument or deed be and stand transferred to or vested in or be deemed to

have been Transferred to or vested in the Transferee Company and shall become the debt, duties,

undertaking, liabilities and obligations of the Transferee Company which shall meet, discharge and satisfy

same.

(iii) All assets, rights, title, interest and authorities accrued to and/or acquired by the Transferor Company in

relation to or in connection with the Undertaking after the Appointed Date and prior to the Effective Date shall

be learned to have been accrued to and/or acquired for and on behalf of the Transferee Company and shall

upon coming into effect of the Scheme pursuant to the provisions of Section 229(2) of the act, without any

further act, instrument or deed be and stand transferred to or vested in or be deemed to have been

transferred to or vested in the Transferee Company to the extent and shall become the assets, rights, title,

interests and authorities of the Transferee Company.



6.With effect from the Appointed Date and up to the Effective Date —

(i) The Transferor Company shall carry on and shall be deemed to have carried on all its business and activities

as hitherto and shall hold and stand possessed of and shall be deemed to have held and stood possessed of

the Undertaking on account of the for the benefit of and in trust for the Transferee Company.

(ii) All the profits or incomes accruing or arising to the Transferor Company or expenditures or losses arising or

incurred (including the effect or taxes, if any, thereon) by the Transferor Company shall, for all purposes, be

treated and be deemed to be and accrue as the profits or incomes or expenditures or taxes of the Transferee

Company, as the case may be.

7. (a) Upon the coming into effect of this Scheme, and subject to the provisions of this Scheme all contract,

deeds, bonds, agreements, arrangements and other instruments (including all tenancies, leases, license- and

other assurances in favour of the Transferor Company or powers or authorities granted by or to it) of

whatsoever nature to which the Transferor Company is a party or to/the benefit of which the Transferor

Company may be eligible, and which are subsisting or having effect immediately before the Effective Date,

shall, without any further act, instrument or deed, be in full force and effect against or in favour of the

Transferee Company, as the case may be, and may be enforced fully and effectively as if, instead of the

Transferor Company, the Transferee Company had been a party or beneficiary or oblige thereto. The

transferee Company shall, at any time prior to the Effective Date, wherever necessary, enter into, and/or

execute deeds, writings, confirmations, any tripartite arrangements or notations to which the Transferor

Company will, if necessary also be a party in order to give formal effect to the provisions of this Clause.

(b) The Transferee Company may, at any time after coming into effect or this Scheme in accordance with the

provisions hereto if so required under any law or otherwise, entire into issue or execute deeds, Writings

confirmations any tripartite arrangements novations, declaration or other documents with or in favour of any

party to any contract or arrangement to which the Transferee Company is party or any writings to which the

Transferee Company is party or any writings as may be necessary to be executed in order to give formal effect

to the above provisions. The Transferee Company shall be deemed to be authorized to execute any such

writings on behalf of the Transferor Company and to carry out or perform all such formalities or compliance

required for the purpose referred to above of the part of the Transferor Company.

8. (a) Upon the coming into effect of the Scheme, all employees of the Transferor Company in service on the

Effective Date shall become the employees of the Transferee Company on such date without any break or

interruption in service and on such terms and conditions that were agreed between the employees and the

Transferor Company. The Transferee Company undertakes to continue to abide by any agreement settlement,

if any, entered into by the Transferor Company with any employees.

(b) The existing provident fund, gratuity or other employee related funds created by the Transferor Company

shall at an appropriate stage be transferred to the relevant funds of the Transferee Company and till such time

shall be maintained separately. The Transferee Company undertakes to continue to abide by the provisions of

any, "Trust Deeds" of any such funds.



D. PART-IV-RE-ORGANIZATION OF CAPITAL

9. Upon the coming into effect of this Scheme and in consideration of the transfer of and vesting of the

Undertaking and the Liabilities of the Transferor Company to the Transferee Company in terms of this Scheme,

the Transferee Company shall without any further application, act, instrument of deed, issue and allot to the

ordinary shareholders of the Transferor Company whose names are recorded in the Register of Members (the

"Member") on a date hereinafter referred to as the "Record Date") to be fixed by the Board of Directors of the

Transferee Company, Ordinary shares of Tic. 100.00 (Taka one hundred) each, credited as fully paid up in the

ratio of I ordinary shares in the Transferee Company for every 1 (one) ordinary share of the face value of Tk.

100.00 (Taka one hundred) each held in the Transferor Company.

10. No certificate(s) shall be issued in respect of fractional entitlements if any, by the Transferee Company, to

which the Members may be entitled on issue an allotment of share of the Transferee Company. The Board of

Directors of the Transferee Company shall, instead consolidate all such fractional entitlements and thereupon

issue_ and allot shares in lieu thereof to the Company Secretary or such other persons as the Board of

Directors of the Transferee Company shall appoint in this behalf who shall hold the shares in trust on behalf of

the members entitled to fractional entitlements with the express understanding that such Companies

Secretary or persons shall sell the same in the market at such time or times; at such price or prices; and at such

exchange or exchanges as he may deem fit and pay to the Transferee Company, the net sale proceed thereof,

whereupon members in proportion to their respective fractional entitlements.

11. (a) Ordinary shares of the Transferee Company, if any, held by Transferee Company on the Record Date

shall be cancelled and deemed to have been cancelled without any further act or deed, and no shares of the

Transferee Company are required to be issued in lieu thereof

(b) Ordinary shares of the Transferee Company, if any, held by Transferee Company on the Record Date shall

be cancelled and deemed to have been cancelled without any further act or deed, and shares of the

Transferee Company are required to be issued in lieu thereof.

12. Ordinary shares issued and allotted by the Transferee Company in teams of this Scheme shall be subject to

the provisions of the memorandum and Articles of Articles of Associations of the Transferee Company and

shall rank pari-passu in all respects with the then existing ordinary share of the Transferee Company, including

in respect of dividends, if any that may be declared by the Transferee Company, on or after the Effective date.

E. PART-V- GENERAL TERMS AND CONDITIONS:

13. With effect from the date of filing of this Scheme with the Hon'ble High Court Division of the Supreme

Court of Bangladesh (hereinafter called the "High Court") and up to and including the Effective Date, the

Transferee Company shall be entitled to declare, and pay dividends whether interim or final, to their ordinary

shareholders in respect of the accounting period after the Appointed Date and prior to the Effective Date.

14. (a) Upon the coming into effect of this Scheme and with effect form the Appointed Date, for the purpose of

accounting and dealing with the value of the assets and liabilities of the Transferee Company in the books of

Company, the assets and liabilities of the Transferee Company as appear in its audited financial statements as

of the Appointed dated shall be accounted.

(b) Any excess of the net assets of the Transferor Company over the paid up value of the shares to be issued

and allotted by the Transferee Company pursuant to this scheme, shall be transferred and credited to the

"Capital Reserve" in the books of the Transferee Company.



15. The Board of Directors of the transferor company and the Transferee Company may assent on behalf of l

concerned from time to time to any modifications or amendments or additions to this Scheme or to any

conditions, which the High Court Division may under law thinks fit to approve or impose and may do and

execute all acts, deeds, matters and things necessary for bringing this Scheme into effect or to review position

relating to the satisfaction of the conditions to this Scheme and it necessary to waive any of those (to the

extent permissible under the law for bringing this Scheme into effect.

16. This Scheme is conditional upon and subject to the sanction by the Hon'ble High Court Division of the

Supreme Court of Bangladesh pursuant to Section 228 read with Section 229 of the Act, and to requisite orders

made by the Hon'ble High Court Division pursuant to 228 read with Section 229 of the Act for amalgamation of

the Transferor Company with the Transferee Company. This Scheme shall be deemed to have been effective

on the date the certified copy of the order passed by the Hon'ble High Court Division is filed with Registrar of

Joint Stock Companies, Dhaka, Bangladesh.

17. All cost, charges, expenses, including any taxes and duties of the Transferor Company and the Transferee

Company respectively in relation to or in connection with this Scheme and incidental to the completion of the

amalgamation of the Transferor Company in pursuance of this Scheme shall be born and paid by the

Transferee Company.

18. In the event of this Scheme failing to take effect finally, this Scheme shall become null and void and in that

event, no rights and liabilities whatsoever shall accrue to or be incurred inter se by parties hereto or their

shareholders or creditors or employees or any other person(s).

• Shares issued through amalgamation are as under:

Sl date

of

issu

e

persons to whom

those are issued

relationship with the

issuer

Number of

Shares

Issue

Price

considerati

on

valua

tion Reason

1

01

/04

/20

15

Kao Wen Fu Managing Director &

Director 178,066

100

In e

xch

an

ge

of

Ord

ina

ry

Sha

res

At

pa

r

Am

alg

am

ati

on

2 Cheng Che Seng Shareholder 40,068

3 Ever Priority Ltd. Shareholder 664,000

4 Chung Wen Kuei Chairman 144,000

5 Shen Ming Hsiung Shareholder 66

No benefit have been accrued to the issuer out of the Issue



(vii) Where the issuer has issued equity shares under one or more employee stock option schemes, date-wise details of

equity shares issued under the schemes, including the price at which such equity shares were issued;

The Company has notissued equity shares to employees under any stock option. However, Shares have been allotted

in cash to Mr. Md. Abdul Mannan, Deputy Managing Director of the company. Details of which as under:

Sl Name Position Date of

Allotment

Number of

Shares

Issue Price Amount in

Tk.

1 Md. Abdul

Mannan

Deputy Managing Director 14/02/2016 1,100,000 Issued at Par 11,000,000

(viii) If the issuer has made any issue of specified securities at a price lower than the issue price during

the preceding two years, specific details of the names of the persons to whom such specified

securities have been issued, relation with the issuer, reasons for such issue and the price thereof;

There is no such transaction where the company has made any issue of specified securities at a

price lower than the issue price during the preceding two years.

(ix) The decision or intention, negotiation and consideration of the issuer to alter the capital

structure by way of issue of specified securities in any manner within a period of one year from

the date of listing of the present issue;

The Company has no such decision or intention, negotiation and consideration to alter the capital

structure by way of issue of specified securities in any manner within a period of one year from the

date of listing of the present issue.



(x) The total shareholding of the sponsors and directors in a tabular form, clearly stating the names, nature of issue, date of allotment, number of shares, face value,

issue price, consideration, date when the shares were made fully paid up, percentage of the total pre and post issue capital, the lock in period and the number

and percentage of pledged shares, if any, held by each of them;

Sl. Name of Director and

Sponsor Position

Nature of

Issue Date of Allotment No of Shares

Face

Value/Issue

Price

Consideration Total

Percentage *Lock-in

Period

% of

Pledge

Share Pre-IPO Post-IPO

1 Chen Kuo Kung Sponsor Ordinary MOA(01/08/2000) 10,000

10 Cash

Presently this

Sponsors do

not hold any

share of the

company

0.00% 0.00% N/A No

Pledge Transfer (28/09/2000) (10,000) Cash (Transfer)

2 Chiu Ching Ping Sponsor Ordinary

MOA(01/08/2000) 10,000

10

Cash

0.00% 0.00% N/A No

Pledge 01/07/2002 1,310,000 Cash

Transfer (26/09/2013) (1,320,000) Cash (Transfer)

3 Mafiz Ahmed Bhuiyan Sponsor Ordinary

MOA(01/08/2000) 10,300

10

Cash

0.00% 0.00% N/A No

Pledge 01/07/2002 1,349,700 Cash


4 A.K.M. Zakir Hossain Sponsor Ordinary

MOA(01/08/2000) 10,300

10

Cash

0.00% 0.00% N/A No

Pledge 01/07/2002 1,349,700 Cash


5 Yang Ming TE Sponsor Ordinary MOA(01/08/2000) 10,000

10 Cash

1,320,000 1.27% 1.06% 3 Years No

Pledge 01/07/2002 1,310,000 Cash

6 Kao Wen FU Managing

Director Ordinary

01/07/2002 1,310,000

10

Cash

3,717,549 3.57% 2.99% 3 Years No

Pledge

28/09/2000 10,000 Cash

01/04/2015 1,780,660 Other than Cash

14/02/2016 616,889 Cash

7

Ever Proirity Ltd.

Represented by Lin Chih-

Wen

Director Ordinary

26/09/2013 1,320,000

10

Cash

43,035,650 41.30% 34.65% 3 Years No

Pledge

Cash

26/07/2009

200,000 Cash

1,160,000 Cash

1,360,000 Cash

01/04/2015 6,640,000 Other than Cash

14/02/2016 32,355,650 Cash

8 Mr. Cheng Che Seng Sponsor Ordinary

MOA(01/08/2000) 10,000

10

Cash

1,720,680 1.65% 1.39% 3 Years No

Pledge 01/07/2002 1,310,000 Cash

01/04/2015 400,680 Other than Cash

9 Mr. Chung Wen Kuei Chairman Ordinary

12/11/2011 857,400

10

Cash

3,261,415 3.13% 2.63% 3 Years No

Pledge 01/04/2015 1,440,000 Other than Cash

14/02/2016 964,015 Cash

10

Eternal Flame

International Co. Inc.

Represented by Yang

Ming Te

Director Ordinary

17/05/2015 100

10

Cash

10,886,580 10.45% 8.76% 3 Years No

Pledge 14/02/2016 10,886,480 Cash

[*Lock-in starts from the issue date of Prospectus]

Face value of company’s share was Tk. 100/- each and was converted in to Tk. 10/- vide EGM dated June 08, 2015; Face value of shares on the above table was considered at Tk. 10/- for better presentation.



(xi) The details of the aggregate shareholding of the sponsors and directors, the aggregate number of

specified securities purchased or sold or otherwise transferred by the sponsor and/or by the directors

of the issuer and their related parties within six months immediate preceding the date of filing the

prospectus;

Aggregate shareholding of the sponsors and directors:

Sl. Name of Director

and Sponsor Position Date of Allotment No of Shares Total

Percentage

Pre-IPO Post-IPO

1 Chen Kuo Kung Sponsor MOA(01/08/2000) 10,000

Presently

these

Sponsors do

not hold

any share of

the

company

0.00% 0.00% Transfer (28/09/2000) (10,000)

2 Chiu Ching Ping Sponsor

MOA(01/08/2000) 10,000

0.00% 0.00% 01/07/2002 1,310,000

Transfer (26/09/2013) (1,320,000)

3 Mofiz Ahmed

Bhuiyan Sponsor

MOA(01/08/2000) 10,300

0.00% 0.00% 01/07/2002 1,349,700

Transfer (26/07/2009) (1,360,000)

4 A.K.M. Zakir Hossain Sponsor

MOA(01/08/2000) 10,300

0.00% 0.00% 01/07/2002 1,349,700

Transfer (09/08/2005) (1,360,000)

5 Yang Ming TE Sponsor MOA(01/08/2000) 10,000

1,320,000 1.27% 1.06% 01/07/2002 1,310,000


Director

01/07/2002 1,310,000

3,717,549 3.57% 2.99% 28/09/2000 10,000

01/04/2015 1,780,660

14/02/2016 616,889

7

Ever Proirity Ltd.

Represented by Lin

Chih-Wen

Director

26/09/2013 1,320,000

43,035,650 41.30% 34.65% 26/07/2009

200,000

1,160,000

1,360,000

01/04/2015 6,640,000

14/02/2016 32,355,650

8 Mr. Cheng Che Seng Sponsor

MOA(01/08/2000) 10,000

1,720,680 1.65% 1.39% 01/07/2002 1,310,000

01/04/2015 400,680

9 Mr. Chung Wen Kuei Chairman

12/11/2011 857,400

3,261,415 3.13% 2.63% 01/04/2015 1,440,000

14/02/2016 964,015

10

Eternal Flame

International Co. Inc.

Represented by Yang

Ming Te

Director

17/05/2015 100

10,886,580 10.45% 8.76% 14/02/2016 10,886,480

No specified securities purchased or sold or otherwise transferred within six months immediate preceding the

date of filing the prospectus i.e. within November 19, 2015 by the sponsors and/or by the directors of the

issuer and their related parties except the following newly issued shares:

Sl. Name Position Date of

Acquisition

Newly issued No of

Shares

1 Kao Wen FU Managing Director 14/02/2016 616,889

2 Ever Priority Ltd Director 14/02/2016 32,355,650

3 Chung Wen Kuei Chairman 14/02/2016 964,015

4 Eternal Flame Int’l Co. Inc. Director 14/02/2016 10,886,480



(xii) The name and address of any person who owns, beneficially or of record, 5% or more of the securities

of the issuer, indicating the amount of securities owned, whether they are owned beneficially or of

record, and the percentage of the securities represented by such ownership including number of equity

shares which they would be entitled to upon exercise of warrant, option or right to convert any

convertible instrument;

SL Name of Shareholders Address Position No of

Shares %

No of Equity

Shares entitled to

upon exercise of

warrant, option

or right to

convert any

convertible

instrument

1 Ever Priority Ltd 6F-1, No. 538, SEC-4, Chung Yang N

Road, Taipei, Taiwan. Director 43,035,650 41.30% N/A

2 Eternal Flame Int’l Co.

Inc

4FL-250, SEC-4, Chung Hsiau, E-Rd,

Taipei, Taiwan. Director 10,886,580 10.45% N/A

(xiii) The number of securities of the issuer owned by each of the top ten salaried officers, and all other

officers or employees as group, indicating the percentage of outstanding shares represented by the

securities owned.

No officer of the company own shares of Shepherd Industries Limited as on 30June 2016 except Mr. Kao

Wen Fu, Managing Director and Mr. Md Abdul Mannan, Deputy Managing Director of the company.

Details of their holdings are as under:

SL Name of Shareholders Address Position No of

Shares

Pre IPO

Percentage

1 Kao Wen FU 4-FL-1, 250, Sec-4, Chung

Hsiau, E, RD. Taipei, Taiwan. Managing

Director 3,717,549 3.57%

2 Md Abdul Mannan

Hose-10, Road-3, Sector-

11, Uttara Model Town,

Dhaka-1230

Deputy Managing

Director 1,100,000 1.06%



(d) DESCRIPTION OF BUSINESS:

(i) The date on which the issuer company was incorporated and the date on which it commenced

operations and the nature of the business which the company and its subsidiaries are engaged in or

propose to engage in;

The company was incorporated as a private Limited company under the Companies Act 1994, vide

registration no: C-41066(425)/2000 on August 21, 2000 subsequently was converted to public Limited

company on June 08, 2015.Shepherd Yarn Limited was amalgamated with Shepherd Industries Limited by

the order of Hon’able High court division of Supreme Court of Bangladesh dated 15th

December 2014 with

effect from April 01, 2015.

The company started its commercial operation on October 18, 2001

The Company has no subsidiary and/or associate company.

Nature of Business: Shepherd Industries limited is a 100% export oriented company engaged in dyeing of

different counts of yarn and market the processed yarn as deemed exporter.

(ii) Location of the project: Factory of the company is located at Bagrapara, Kathalia, Bhaluka,

Mymensingh.

(iii) Plant, machinery, technology, process, etc.

Shepherd Industries Limited has been using State of the Art machineries and technologies in order to dye

of (acrylic, wool, cotton, viscos etc.) yarn. Its manufacturing process is heavily technology driven, dynamic

in nature with cutting edge technology. Shepherd Industries Limited has modern research and

development facilities, up-to-date water generation and fire management system and echo friendly

biological effluent treatment plant. Total quality management lead by the trained professionals, strict

monitoring, and true measurement always provided competitive advantage.



iv) Details of the major events in the history of the issuer, including details of capacity/facility creation,

launching of plant, products, marketing, change in ownership and/or key management personnel etc.;

Date of

Incorporation:

As a private limited company on 21st August, 2000 having a Vide Registration No.

C-41066(425)/2000.

Private to Public: Converted into a public limited company on 8th

June,, 2015 with Register of Joint

Stock Companies and Firms (RJSC) in Bangladesh under the Companies Act, 1994.

Amalgamation: The company was amalgamated with Shepherd Yarn Limited, under the scheme

of amalgamation by the order of the Hon’able High Court Division of Supreme

Court Bangladesh dated December 15, 2014 with effect from April 01, 2015.

Capacity: 80,000Lbs/day.

Launching of Plant: 13 September, 2001

Launching of

Products:

8 October, 2001

Launching of

Distribution

Channel:

18 October, 2001

Date of Commercial

Operation:

18 October, 2001.

Change in Owner

Ship

Name Position Date of

Change in

Ownership

Remarks

Chen Kuo

Kung

Chairman 28/09/2000 Transferred his entire share to

Mr. Kao Wen Fu

Chiu Ching

Ping

Sponsor

Director

26/09/2013 Transferred her entire share to

Ever Priority Limited

A.K.M Zakir

Hossain

Director 09/08/2005 Transferred 200,000 shares to

Neaz Ahmed Bhuyian and

11,60,000 shares to Ms. Mahnur

Ummel Ara; later on they

transferred their entire shares to

Ever Priority Limited on

26/07/2009

Mafiz

Ahmed

Bhuiyan

Managing

Director

26/07/2009 Transferred his entire shares to

Ever Priority Limited.

Chang in Key

Management

Personnel

There were no changes in Key Management personnel except the change of

Managing Director mentioned above. Presently Mr. Kao Wen Fu is holding the

office of Managing Director.

Appointment of

Independent

Director:

Appointment of Mr. Md. Monzur Alam Khan(Barrister-at-Law) is approved by the

shareholders in the AGM held on 28/08/2016.



(v) Principal products or services of the issuer and markets for such products or services. Past trends and

future prospects regarding exports (if applicable) and local market, demand and supply forecasts for the

sector in which the product is included with source of data;

Shepherd Industries Limited operates its business as a backward linkage industry and engaged in dyeing

different count of cotton, acrylic, wool and viscos yarn in Bangladesh. SIL is a 100% export oriented

industry. SIL sells its products through L/Cs to the 100% export oriented sweater manufacturers who

consume the dyed yarn as raw material for production of readymade sweater to export abroad.

Therefore, the final destination of the company’s products is overseas market. Shepherd Industries

Limited ultimately produces yarn for renowned sweater manufacturers which are later on consumed by

the world famous brand.

Past Trends:

Last five years sales of Shepherd Industries Limited:

Particular

01-04-16

to

30-06-2016

01-04-2015

to

31-03-2016

01-01-2015

to

31-03-2015

01-01-2014

to

31-12-2014

01-01-2013

to

31-12-2013

01-01-2012

to

31-12-2012

01-01-2011

to

31-12-2011

Turnover 756,861,925 2,636,557,896 390,141,810 1,780,751,795 1,878,484,554 1,883,339,590 1,179,310,883

Future Prospects:

Bangladesh Export sector is heavily inclined to RMG. RMG and textile sector contributes maximum of

national export of Bangladesh. This sector has remarkable growth and huge contribution to the overall

export of the country. As a backward linkage of RMG sector SIL also has the opportunity to increase its

export.

(vi) If the issuer has more than one product or service, the relative contribution to sales and income of each

product or service that accounts for more than 10% of the company’s total revenues;

Since, the company is engaged in the business of yarn dyeing. Hence, dyed yarn is the only product

contributes 100% on the total revenue.

(vii) Description of associates, subsidiary and holding company of the issuer and core areas of business

thereof;

Shepherd Industries Limited has no associate, subsidiary and holding company.

(viii) How the products or services are distributed with details of the distribution channel. Export

possibilities and export obligations, if any;

On receiving orders from customers, Shepherd Industries Limited manufactures the products and supplies

to the destination as per their requirements of the customer. Since the company is deemed exporter, it

supplies the products to the local destinations.


Prospectus: Shepherd Industries Limited

Process Flow:

For Acrylic, Wool, Nylon and Viscos

For Cotton:

Export possibilities and export obligations:

We do not have any export obligation rather there is good potential of expansion for export.

(ix) Competitive conditions in business with names, percentage and volume of market shares of major

competitors;

There is huge demand –supply gap for the product of the Company in the

(Local and International market). Being one of the high quality

capable of exploiting the opportunities though there are a number of competitors in the local market.

Such as:

Sl. No. Name

1 Kung Keng Ltd

2 Chunji Ltd

3 Ring Shine Ltd

4 Everway Textile Ltd

5 Dongbeng Ltd

6 Labib Yarn Dyeing Ltd

* No market data regarding volume and market shares of the aforementioned companies

Raw Materials Incoming

Raw Materials

Inspection

PackingDelivery

Raw Materials Incoming

Raw Materials

Inspection

PackingDelivery



os:

Export possibilities and export obligations:

rather there is good potential of expansion for export.

Competitive conditions in business with names, percentage and volume of market shares of major

supply gap for the product of the Company in the sweater manufacturing market

(Local and International market). Being one of the high quality yarn dyeing Industry in the country,


Name Sl. No Name

Kung Keng Ltd 7 Tamishna Yarn Dyeing Limited

8 Belly Yarn Dyeing Limited

Ring Shine Ltd 9 Masuma Kahatun Yarn Dyeing

Everway Textile Ltd 10 F M Yarn Dyeing Ltd

Dongbeng Ltd 11 Queen South Textiles (BD) Ltd

Yarn Dyeing Ltd 12 Anlima Yarn Dying Limited

market data regarding volume and market shares of the aforementioned companies are available

Materials Inspection

Hangs Process

Steam

DryingQuality

Inspection

Materials Inspection

Soft Winding

R T Winding

DryingQuality

Inspection

Competitive conditions in business with names, percentage and volume of market shares of major

manufacturing market

in the country, SIL is


Tamishna Yarn Dyeing Limited

Masuma Kahatun Yarn Dyeing

are available.

Dyeing

Hydro

Dyeing

Hydro



(X) Sources and availability of raw materials, names and addresses of the principal suppliers and contingency

plan in case of any disruption:

Basic raw materials used for production are raw yarn and dyes chemical which are mostly procured from

abroad. For the better quality assurance the company mostly looks for foreign sources. However, to maintain

the steady production sometimes the company has to procure from local sources as well. Suppliers are

evaluated periodically on supplier’s reliability, quality and prices with new suppliers being added after they

meet the required quality and reliability benchmarks. Names of main suppliers are mentioned below:

SL. No. Supplier Name Address

1 Full Excellent Corp. 2F., No-105 Wuxing St., Xinyi, Dist., Taipei City, 110, Taiwan R.O.C

Tel- (0) 2773-4337

2 Purbani Synthetic Spinning Ltd Dewaliabari, Konabari, Gazipur , Bangladesh

3 Kung Keng Textile (BD) Ltd.

Dhaka Export Processing Zone (Ext), Plot. 133-148 and 164, Savar,

Dhaka, Bangladesh

4 BTO Singapore PTE Ltd. 31 Jurong Port Road 06- 04/05, Jurong Logistics Hub, Singapore

,619115

5 Sonic Eagle Industry Ltd No 167, Dingcheng 3rd

ST, Xindian Dist, New Taipei City 231 ,

Taiwan ROC , Tel- +886963-099092

6 Bay Poly and Packaging Ltd 47/Ka, East Islambag, Chakbazar, Dhaka , Bangladesh

7 MEGA Hope Textile Ltd. 7F-1, No. 518, Fuxtile N. RD, Zhongs, Dist, Taipei City 104, Taiwan

ROC. Tel. 886-2-82112066

8 P.T. Pini Jaya Indusrti JL. Palem I Blok DS No. 3B, Kawasan Indusrti, Hyundai Lippo,

Cikarang Bekasi 17550, Bekasi- Indonesia.

9 Jiangsu Guo Tai International Group

Guo Mao Co. LTD.

22F, Guotai Times Plaza, Building A, No.65, Ren Min Road,

Zhangjiagang, Jiangsu, China

10 PT. Kahatex JL. K.H.Wahid Hasyim 119, Jakarta, Indonesia.

11 Full Harvest Limited 4F., No 3, Ln 36, Shuiyuan St., Yonghe Dist., New Taipei City 234,

Taiwan (R.O.C)

12 Hussain Mills Limited Fazalabad Vehari Road, Multan, Pakistan

13 Damodar Industries Limited A1/202, Centre Point, 243 N.M. Joshi Marg Lower Parel €, Mumbai-

400013

14 Mega Hope Textile Limited 7F-1, No.518, Fuxing n. Rd., Zhongshan Dist., Taipei City 104,

Taiwan(R.O.C)

15 Nahar Spinning Mills Limited 373, Industrial Area-A, Ludhiana-141003, India

16 Vardhaman Polytex Limited 341 K-1, Mundian Khurd, Chandigarh Road, Ludhiana-141 123

Punjab, India.

Contingency Plan: As numbers of suppliers of raw materials are plenty in the market, if one fails to

provide raw material there are always another suppliers available. So there is no possibility of disruption.

(xi) Sources of, and requirement for, power, gas and water; or any other utilities and contingency plan in

case of any disruption;

Power (Captive): Shepherd Industries Limited has own power generation source by gas and Diesel

generator. The required power is available from own captive power generator. List of generators are

stated below:

Sl Run By Capacity

1 Natural Gas 1700 KVA

2 Natural Gas 1030 KW

3 Natural Gas 1030 KW

Water:The requisite water supply is available from the own deep tube-well installed in the factory

premises.

Gas:SIL needs gas for captive power plant. SIL meets the requirement of GAS from TITAS Gas Transmission

and Distribution Company Limited (TGTDCL)

Contingency plan in case of any disruption: In addition to the GAS generators the company has one 260

KVA and three 250KVA diesel stand by generators and will be used in case of any disruption.



(xii) Names, address(s), telephone number, web address, e-mail and fax number of the customers who account for 10% or more of the company’s products/services

with amount and percentage thereof;

Shepherd Industries Limited has no customers who are purchasing 10% or more of the company’s products during the period ended June 30, 2016.

(xiii) Names, address(s), telephone number, web address, e-mail and fax number of the suppliers from whom the issuer purchases 10% or more of its raw

material/finished goods with amount and percentage thereof;

The Company has the following suppliers from whom the company purchases 10% or more of its raw materials/finished goods.

SL.

No.

Supplier

Name Address

Telephone

No. Web Address E-mail

Fax

Number

Amount in Tk.

01-04-2016

to

31-06-2016

Percentage

1 Full

Harvest

Ltd

4F., No 3, Ln 36,

Shuiyuan St., Yonghe

Dist., New Taipei City

234, Taiwan (R.O.C)

+6928312354 No web

address [email protected]

No Fax

Number 10.47 crore 34.90%

2

Full

Excellent

2F., No-105 Wuxing

St., Xinyi, Dist.,

Taipei City, 110,

Taiwan R.O.C

2773-4337 No web

address [email protected]

No Fax

Number 5.25 crore 17.49%



(xiv) Description of any contract which the issuer has with its principal suppliers or customers showing the

total amount and quantity of transaction for which the contract is made and the duration of the

contract. If there are not any of such contracts, a declaration is to be disclosed duly signed by CEO/MD,

CFO and Chairman on behalf of Board of Directors;

The company has not entered into any contract with any of its suppliers or customers.

Declaration regarding contract with principal suppliers or customers

September 23, 2016

We, on behalf of the Board of Directors certify that the Shepherd Industries Limited did not enter into

contract with its principal suppliers or customers.

Sd/-

Kao Wen Fu

Managing Director & Director

Sd/-

Chung Wen Kuei

Chairman & Director

Sd/-

Md. Ataur Rahman




xv) Description of licenses, registrations, NOC and permissions obtained by the issuer with issue,

renewal and expiry dates;

Sl. Name of

License/Registration/NOC

License Issuer/Issuing Authority

Certificate / License No.

Issue Date Validity Status

1 Trade License Bhaluka Powroshova 01562 08-07-2015 Valid up to 2016-17 2 ERC CCI&E Ra 53255 30-01-2001 Valid up to 2016-17 3 IRC CCI&E BA 104118 30-07-2001 Valid up to 2016-17

4 Fire Bangladesh Fire Service and Civil Defense

Mymen/811/2001 01-08-2001 Valid up to 2016-17

5 Kolkarkhana o Protishthan

Prodhan Poridorshok Kolkarkhana O Protishthan

10958/Mymensingh 16-08-2001 Valid up to June, 2017

6 Bonded Warehouse

Customs Bond Commissionarate

5(13) 210/cus-bond/li:/2001/part-3/2014/13721

18-08-2015 Valid up to 15-08-2017

7 BOI Registration Board of Investment BOI/R&I-1/2520/2001/62

21-01-2001 N/A

8 Environment Certificate

Department of Environment

Poribesh/dhabi/3704/2557

31-10-2016 Valid up to 22-06-2017

9 Boiler Office of Chief Boiler Inspector

�� 30/12/15 29/11/2016

�� 30/12/15 29/11/2016

�� 30/12/15 29/11/2016

�� 10/08/16 10/02/2017

10 Membership Certificate

The Maymensingh Chamber of Commerce & Industry

Sl. No. 17867 14-07-2016 Valid up to 30-06-2017

11 Membership Certificate

Bangladesh Dyed Yarn Exporters Association

Sl. No. 12 21-01-2013 Valid up to 31-12-

2016

12 TIN Certificate National Board of Revenue

e-TIN: 815674589022 06-10-2013 N/A

13 Value Added Tax

National Board of Revenue

18091004625 13-11-2012 N/A

14 Oeko-Tex Standard 100 HKYO 105586 Testex

Institute of the International Association for Research and Testing in the Field of Textile Ecology

BD-2240 Mymenshing

07-10-2015 Valid until 15-08-2017

(xvi) Description of any material patents, trademarks, licenses or royalty agreements;

The Company neither obtained any patent right/trademarks nor signed any royalty agreement with any

party.



(xvii) Number of total employees and number of full-time employees;

The company has 596 full-time permanent employees as of June 30, 2016 and all the employees are

receiving more than 3,000/ months. Details are as follows:

As per audited accounts

All the employees receive salary/wages in excess of Tk. 3,000 per month.

Number of permanent staff 210

Number of permanent workers 386

Number of temporary staff/worker -

Total: 596

(xviii) A brief description of business strategy; SIL‘s key strategic objectives are to:

� The company established State-of-the-art manufacturing facilities for ensuring best quality

products to its customers.

� Expansion of existing and development of new large scale projects for a diversified product

range to stimulate the growth.

� Expansion of ETP, establishment of washing plant & BMRE of the existing Unit to cope up with

the market demand.

� Continuously seeking new ways of working to improve efficiency and ensure sustainability.

(xix) A table containing the existing installed capacities for each product or service, capacity utilization for

these products or services in the previous years, projected capacities for existing as well as proposed

products or services and the assumptions for future capacity utilization for the next three years in

respect of existing as well as proposed products or services. If,the projected capacity utilization is

higher than the actual average capacity utilization, rationale to achieve the projected levels.

Existing Capacity Utilization:

Description Installed Capacity Actual

Production

% of

Capacity

Utilization

Different Count of Yarn Dyeing 80,000 Lbs/Day 63,256 Lbs/Day 79.07%

Projected capacity utilization:

Sl.

No

Name of

Product

2018-19 2017-18 2016-17

Production

Capacity/day

Capacity

Utilization

/day

Utiliz

ation

(%)

Production

Capacity

/day

Capacity

Utilization

Yds

Utilizat

ion (%)

Production

Capacity

/day

Capacity

Utilization

Yds

Utiliza

tion

(%)

1 Dyed Yarn 100,000 Lbs 82,000 82% 100,000 Lbs 81,000 81% 90,000 Lbs 69,200 Lbs 77%

2 Washing of

garments

8,000 Dz 5,600 Dz 70% 8,000 Dz 5,200 Dz 65% 8,000 Dz 4,800 Dz 60%

ASSUMPTIONS FOR FINANCIAL CALCULATION:

Profitability potential of the project has been estimated for five years of operation to assess the financial

viability of the project. The capacity build up has been assumed to be achieved gradually at the rate of 60%,

65%, 70% 75% & 80% of estimated attainable capacity in the 1st

, 2nd

, 3rd

, 4th

and 5th

year of operations and

onwards for the washing plant. Moreover, the market of yarn dyeing is increasing and the projected capacity

shown in the above table for dyeing unit up to 2018-19 is very reasonable and achievable.

RATIONALE TO ACHIEVE:

The company has projected that the capacity utilization will be increased due to installation of new machine as

well as increase in the market demand for dyed yarn and washing of garments. The company will utilized its

remaining capacity to meet the additional market demand for existing products as well as new products.



(e) Description of Property:

The Written down value of Property, Plant and equipment’s owned by the company as per audited accounts as

on 30th

June, 2016 are stated below:


Schedule of Property, Plant & Equipment

as on June 30, 2016 Amount in Taka

Particulars Written Down Value as on

30-06-16

Building - Factory 111,370,979

Land & Land Development 263,658,642

Plant & Machinery 167,499,919

ETP 45,760,672

Electric Equipment & Line Installation 10,628,135

Fire Fighting Equipment 475,191

Tools & Equipments 9,554,843

Gas Line Installation 2,391,584

Building - Head Office 51,663,152

Office Equipment 5,234,278

Air Conditioner & Electric Appliance 1,125,394

Lift - Head Office, Uttara 1,245,507

Furniture & Fixture 2,197,361

Office Decoration 1,323,603

Car & Vehicles 20,378,008

Telephone Equipments 1,604,039

Sub Total 696,111,307

REVALUATION PART

Land & land Development 547,605,914

Building 90,518,456

Sub Total 638,124,370

Total as on 30.06.2016 1,334,235,677

Total as on 31.03.2016 1,302,877,602



(i)Location and area of the land, building, principal plants and other property of the company and the

condition thereof;

The entire assets are located at the Company’s head office at House No-24, Road No.-4, Sector No-

4, Uttara Model Town, Dhaka-1230 and its factory at Bagrapara, Kathalia, Bhaluka, Mymenshingh,

Bangladesh. 2108.61 decimals of land of the company are located at Kathalia & Paragaon of

Bhaluka, Mymenshingh, Uttara Model Town of Dhaka and Rupgoang (Purbachal) of Narayngang,

Bangladesh. Details are as under:

Sl.

No.

Particulars Location and Area Condition of the Property

01 Land

Kathalia & Paragaon

Bhaluka, Mymenshingh,

Factory Area

Position hold by the company. Head Office, Uttara Model

Town, Dhaka

Rupgoang (Purbachal),

Narayngang

02 Building

Kathalia, Bhaluka,

Mymenshingh, Factory

Area

Factory sheds are in good

condition.

Head Office, Uttara Model

town, Dhaka 6 storied Building

03 Principal plants and

Machineries

Kathalia, Bhaluka,

Mymenshingh, Factory

Area

Working in good condition

04 Office equipment At Factory and Head Office Good Condition

05 Furniture & Fixture At Factory and Head Office Good Condition

06 Vehicles At Factory and Head Office Running

(ii) Whether the property is owned by the company or taken on lease;

All the assets of the Company are in its own name except a car which is financed by IDLC Tk.76 lac.

However, to comply with the requirement of BAS-17 the said car has been accounted for under

finance lease in the Financial Statement and the title deed shall be transferred in the name of the

company after final settlement of lease payment.



iii) Dates of purchase, last payment date of current rent (�� ) and mutation date of lands, deed value and other costs including details of land development cost, if any and current use

thereof;

Sl.

No

.

Location Sale

Deed

No.

Reg. Date Name of Seller Land

Purchase

(Decimal)

Actual Mutation

done(in

Decimal)

Last Payment

Date of Rent

Mutation date Deed Value in BDT Current Use of Land Seller's relation with

sponsor/director

1 Bhaluka 2642 08/04/2001 Mrs. Shamima akter 331.5 673 19/04/2016 07/05/2001 3,315,000 Factory Building No Relation

2 Bhaluka 2643 08/04/2001 Salim Buiyan 309.5 3,095,000 Factory Building No Relation

3 Bhaluka 2644 08/04/2001 Salim Buiyan 32 320,000 Factory Building No Relation

4 Bhaluka 3188 20/04/2004 Md. Majid Sarkar 44 119.75 19/04/2016 30/06/2005 903,000 Factory Building No Relation

5 Bhaluka 3647 13/06/2004 Mrs. Jolakha katun 4.5 93,000 Factory Building No Relation

6 Bhaluka 3552 22/06/2004 Md. Jamad Ali 35 719,000 Factory Building No Relation

7 Bhaluka 3377 22/06/2004 Golap jan BIbI 4.5 93,000 Factory Building No Relation

8 Bhaluka 6971 12/10/2004 Md.Majid Sarker 5 103,000 Factory Building No Relation

9 Bhaluka 6847 16/10/2004 Most. Maleka Khatun 4.5 93,000 Factory Building No Relation

10 Bhaluka 8258 10/11/2004 Hazi Md. Aziz sarker 20.5 421,000 Factory Building No Relation

11 Bhaluka 8259 10/11/2004 Hazi Md. Aziz sarker 1.75 36,000 Factory Building No Relation

12 Bhaluka 1600 01/03/2005 Sholamannasa Gong 35.25 35.25 19/04/2016 2005-2006 852,000 Factory Building No Relation

13 Bhaluka 3019 24/07/2006 Sultan Uddin 39 42

19/04/2016 20/03/2011 762,000 Factory Building No Relation

14 Bhaluka 3002 24/07/2006 Sultan Uddin 3 59,000 Factory Building No Relation

15 Bhaluka 3276 03/08/2006 Niranjan Das 410 410 8,158,000 Dormitory & Vacant Land No Relation

16 Bhaluka 515 13/02/2007 Md. Jamad Ali 42 42 1,267,000 Vacant Land No Relation

17 Bhaluka 4335 28/04/2011 Md. Mafiz Ahamed

Bhuiyan

432 432 19/04/2016 26/05/2011 39,931,000 ETP and R.C.C and

prefabricated Building

Sponsor Director and

former Managing Director,

Now does not hold any

share

18 Bhaluka 10730 28/11/2011 Md. Hafizul Islam 39 39 19/04/2016 20/06/2012 4,565,000 Vacant Land No Relation

19 Bhaluka 10390 05/12/2013 Hazi Md. Aziz sarker 21 21 19/04/2016 17/04/2014 2,496,000 Vacant Land No Relation

20 Bhaluka 2426 19/03/2014 Hazi Md. Aziz Sarker 62.75 62.5 16/05/2014 28/04/2014 15,000,000 Vacant Land No Relation

21 Bhaluka 8103 29/09/2014 Md. Ataur Rahaman Khan 177 171 16/06/2015 24/05/2015 6,700,000 Vacant Land No Relation

22 Bhaluka 2625 05/04/2015 Md. Aminul Islam 24 24 09/11/2016 01/11/2016 1,062,000 Vacant Land No Relation

23 Rupgoang 13683 11/12/2013 Md. Iskander Ali 8.52 8.52 02/03/2016 15/02/2016 1,250,000 Vacant Land No Relation

24 Rupgoang 13684 11/12/2013 Dr. Md. Abdun Noor 8.52 8.52 02/03/2016 15/02/2016 1,250,000 Vacant Land No Relation

25 Rupgoang 13353 03/12/2013 Mostaq Ahmed 8.25 - Under process 1,200,000 Vacant Land No Relation

26 Uttara 4992 02/04/2011 Khandaker Abdul Jamil

Mahabub Hossain

11.82 11.82 07/04/2013 25/09/2012 28,000,000 Head office No Relation

Total 2114.86 2100.36 121,743,000 Add: Registration and other cost 11,869,926 Add: Development Cost 130,045,716 Total Cost of Land Asset 263,658,642

**out of 2114.86 decimal s land 2100.36 decimals land are mutated in the name of Shepherd Industries Limited. The company completed all the formalities and paid requisite fees to RAJUK for mutation of 8.25 decimals land

and mutation of rest 6.25 decimals land could not be mutated as the land area falls into road.



(iv) The names of the persons from whom the lands has been acquired/proposed to be acquired

along with the cost of acquisition and relation, if any, of such persons to the issuer or any sponsor

or director thereof; Sl. No. Location Name of Seller Cost of acquisition/Deed

value

Seller's relation with

sponsor/director

1 Bhaluka Mrs. Shamima akter 3,315,000

Buyer-Seller

2 Bhaluka Salim Buiyan 3,095,000

3 Bhaluka Salim Buiyan 320,000

4 Bhaluka Md. Majid Sarkar 903,000

5 Bhaluka Mrs. Jolakha katun 93,000

6 Bhaluka Md. Jamad Ali 719,000

7 Bhaluka Golap jan BIbI 93,000

8 Bhaluka Md.Majid Sarker 103,000

9 Bhaluka Most. Maleka Khatun 93,000

10 Bhaluka Hazi Md. Aziz sarker 421,000

11 Bhaluka Hazi Md. Aziz sarker 36,000

12 Bhaluka Sholamannasa Gong 852,000

13 Bhaluka Sultan Uddin 762,000

14 Bhaluka Sultan Uddin 59,000

15 Bhaluka Niranjan Das 8,158,000

16 Bhaluka Md. Jamad Ali 1,267,000

17 Uttara Khandaker Abdul Jamil

Mahabub Hossain

28,000,000

18 Bhaluka Md. Mafiz Ahamed Bhuiyan 39,931,000 Sponsor Director and

former Managing

Director.

Now does not hold any

share

19 Bhaluka Md. Hafizul Islam 4,565,000

Buyer-Seller

20 Bhaluka Hazi Md. Aziz sarker 2,496,000

21 Rupgoang Md. Iskander Ali 1,250,000

22 Rupgoang Dr. Md. Abdun Noor 1,250,000

23 Rupgoang Mostaq Ahmed 1,200,000

24 Bhaluka Hazi Md. Aziz Sarker 15,000,000

25 Bhaluka Md. Ataur Rahaman Khan 6,700,000

26 Bhaluka Md. Aminul Islam 1,062,000

Total 121,743,000

(v) Details of whether the issuer has received all the approvals pertaining to use of the land, if

required;

The Company has all the approval related to factory premises from the Bhaluka Powroshova,

Mymenshingh and for the Head Office from RAJUK and other land located at Rupgonj is vacant.



vi) If the property is owned by the issuer, whether there is a mortgage or other type of charge on the

property, with name of the mortgagee;

The factory building, all the plant and machineries, all spare parts along with the

belowmentioned1760.75 decimal lands are under registered mortgage to the lending banks as

follows:

Sl.

No. Mortgage Deed No. Date Description of land/Plot No.

Area in

Decimal

Location

1

IFIC

2642 08/04/2001 SA Dag No.-154 331.50

Bhaluka,

Mymensingh

Bhaluka

2 794

08/04/2001 RS Dag No.-

5475,5474,5475/5491 309.50

3 2644

08/04/2001 RS Dag No.-

5475,5474,5475/5491 32.00

4 4335

28/04/2011 RS Dag No.-

5474,78.82.6910.11.14 432.00

Sub Total 1,105.00

5

SEBL

3188 20/04/2004 RS Dag No.-5463, 64, 66, 5461 44.00

Bhaluka,

Mymensingh

Bhaluka

6 3647 13/06/2004 RS Dag No.-5460 4.50

7 3552 22/06/2004 RS Dag No.-5467-68 35.00

8 3377 22/06/2004 RS Dag No.-5458.5464.5461 4.50

9 6971 12/10/2004 RS Dag No.-5457-58-61-60 5.00

10 6847 16/10/2004 RS Dag No.-5458, 5464 4.50

11 2426 19/03/2014 RS Dag No.-6927 62.50

12 8259 10/11/2004 RS Dag No.-5462 1.75

13 3019 24/07/2006 RS Dag No.-5465 39.00

14 3276 03/08/2006 SA Dag No.-148 410.00

15 515 13/02/2007 RS Dag No.-5471-73 42.00

16 3002 24/07/2006 RS Dag No-5465 3

Sub Total 655.75

Grand Total 1760.75

*Mentionable here that the rest of the land 316.75 decimals located at Bhaluka, Mymenshing, 25.29

Decimals land at Rupgong, Narayangong and 11.82 decimal lands at Uttara, Dhaka are not mortgaged.

(vii) If the property is taken on lease, the expiration dates of the lease with name of the lessor,

principal terms and conditions of the lease agreements and details of payment;

Sl. Date of

Agreement

Lease

Property

Lessor

Name

Lease

Amount

Date of

expiration

Details of

payment

No of

Installment

paid up to

June 30, 2016

Outstanding

Balance as on

30 June 2016

1 March 23,

2015

Jeep

(Toyota

Prado, TX-

LTD)

IDLC

Finance

Ltd.

76 Lac March

2019

48 equal

monthly

installment @

BDT 207,110

14 5,797,118



(viii) Dates of purchase of plant and machineries along with sellers name, address, years of sale, condition when purchased, country of origin, useful economic life

at purchase and remaining economic life, purchase price and written down value;

Name of Machinery

Nos. of

Machinery(

Set/Pcs)

Date of

purchase

Name of

Supplier

Address of

Supplier

Year of

Sale Condition

Country of

Origin

Useful

Economic

Life at

purchase

Estimated

Remaining

Useful Life

Total

purchase

price with

other cost

Written

Down

value

(Amount

in BDT)

3 Bed Flowing Softener 1

13/01/2001

Eternal Flame

International

Co.

No.27 Allay 1,

Lane 94 Taipet,

Taiwan,

Not Sold

Brand new China

20 6 1,340,233 291,527

Filter Tank GLD 2000 1 Not Sold 20 6 972,014 211,432

Stainless Water Tank

Sxy 1 Not Sold 20 6 809,667 176,119

Air Tank 1 Not Sold 20 6 403,452 87,759

Horizontal Smoke-Tube

Boiler 1 15/01/2001

Eternal Flame

International

Co.

No.27 Allay 1,

Lane 94 Taipet,

Taiwan,

Not Sold Brand new Taiwan

20 6 4,862,144 1,057,609


Boiler 1 Not Sold

20 6 4,974,061 1,081,953

Rapid Lab Dyeing

Machine 1

15/01/2001

Eternal Flame

International

Co.

No.27 Allay 1,

Lane 94 Taipet,

Taiwan,

Not Sold

Brand new Taiwan

20 6 585,834 127,430

Rapid Lab Dyeing

Machine 2 Not Sold 20 6 651,049 141,616

Hot Circulator Oven

RHD 1 Not Sold 20 6 69,084 15,028

Whole Set Lab Bottles 1 Not Sold 20 6 165,802 36,066

Electric Precise Scale 1 Not Sold 20 6 182,382 39,672

Electric MRW-30 3 Not Sold 20 6 124,352 27,048

Accessories for Lab

Dying Machine 1 lot Not Sold 20 6 580,307 126,227

30 HP Pump 1 Not Sold 20 6 766,834 166,800

5HP Pump 3 Not Sold 20 6 145,906 31,736

Air Compressor Pump 1 Not Sold 20 6 321,656 69,966

Petal Curved 2 Not Sold 20 6 3,386,783 736,689

Boiler 1 Not Sold 20 6 359,238 78,141

Overhaul 2 Not Sold 20 6 138,168 30,054

Trolley Spare Parts 2 Not Sold 20 6 69,084 15,028

Soft Winder with

Inverter 3 16/01/2001

Eternal Flame

International

No.27 Allay 1,

Lane 94 Taipet, Not Sold Brand new China

20 6 4,766,808 1,036,871



Grooved Drum Winder 3 Co. Taiwan, Not Sold 20 6 4,455,929 969,248

Computerized Cone

Dyeing Machine 6

16/01/2001

Eternal Flame

International

Co. No.27 Allay 1,

Lane 94 Taipet,

Taiwan,

Not Sold

Brand new Taiwan

20 6

20,708,67

3 4,504,528

Preheating Tank 2 Not Sold 20 6 2,323,992 505,514

Auto Controlled steam 2 Not Sold 20 6 2,509,137 545,786

Dyeing Tube 20000Pcs Not Sold 20 6 917,438 199,562

Diesel Generator

250KVA

2

18/01/2001

Eternal Flame

International

Co.

No.27 Allay 1,

Lane 94 Taipet,

Taiwan, Not Sold

Brand new China

20 6 4,752,991 1,033,866

Accessories for Machine

1 lot

25/02/2001

Eternal Flame

International

Co.

No.27 Allay 1,

Lane 94 Taipet,

Taiwan, Not Sold

Brand new Taiwan

20 6 829,010 180,326

Dyeing Machine GFS-10

5

15/03/2001

Eternal Flame

International

Co.

No.27 Allay 1,

Lane 94 Taipet,

Taiwan, Not Sold

Brand new Hong Kong

20 6 2,162,335 470,349

Crane & Rail

1

05/04/2001

Eternal Flame

International

Co.

No.27 Allay 1,

Lane 94 Taipet,

Taiwan, Not Sold

Brand new Taiwan

20 6 967,178 210,381

Installation Charge

1

05/04/2001

Eternal Flame

International

Co.

No.27 Allay 1,

Lane 94 Taipet,

Taiwan, Not Sold

- China

20 6 2,763,367 601,085

Deep Tube Well

1 05/04/2001

Purbachal

Traders Local Purchase Not Sold Brand new

20 6 2,181,606 474,541

Water Tank

1 05/04/2001

Badsha

Traders Local Purchase Not Sold Brand new

20 6 145,440 31,636

Oil Tank

1 10/02/2002

The Moon

Engineering Local Purchase Not Sold Brand new

20 7 168,576 36,669

Water Tank

1 10/04/2002

The Moon


20 7 481,646 104,767

Water Tank

1 13/05/2002

The Moon


20 7 144,494 31,431

Water Iron Removing

Filter 1 16/06/2002

The Moon


20 7 457,564 99,528

Water Tank

1 31/07/2002

The Moon


20 7 361,235 78,576

Water Tank

1 08/09/2002

The Moon


20 7 240,823 52,384



Automatic Dispensing

System and Copower

1

31/08/2003

Eternal Flame

International

Co.

No.27 Allay 1,

Lane 94 Taipet,

Taiwan, Not Sold

Brand new Taiwan

20 8 2,250,704 543,968

Heating Apparatus

3

31/08/2003

Eternal Flame

International

Co.

No.27 Allay 1,

Lane 94 Taipet,

Taiwan, Not Sold

Brand new Hong Kong

20 8 212,365 51,326

Auto Controlled Steam

Dryer

2

18/10/2003

Eternal Flame

International

Co.

No.27 Allay 1,

Lane 94 Taipet,

Taiwan, Not Sold

Brand new China

20 8 1,754,581 424,060

Petal Curved Hydro

extractor 1

18/10/2003

Eternal Flame

International

Co. No.27 Allay 1,

Lane 94 Taipet,

Taiwan,

Not Sold

Brand new China

20 8 1,135,032 274,323

Computerized Cone

Dyeing Machine 1 Not Sold 20 8 9,523,138 2,301,625

Hand Pallet Truck 2 Not Sold 20 8 78,654 19,011

Air Filter Machine 2 Not Sold 20 8 423,519 102,361

Soft Winder with

Inverter 1 18/10/2003

Eternal Flame

International

Co.

No.27 Allay 1,

Lane 94 Taipet,

Taiwan,

Not Sold Brand new China 20 8 1,107,201 267,598

Grooved Drum Winder 1 Not Sold 20 8 1,034,598 250,050

Effluent treatment

plant 1 10/06/2003

Akar Impex

Pvt Ltd. Local Purchase Not Sold Brand new

20 8 3,182,446 769,158

Gas Generator

1

06/01/2004 Caterpillar

Inc.

7 Tractor Road,

Singapore

627968 Not Sold

Brand new United

State 20 9

21,020,96

4 5,645,008

Soft Winder with

Inverter 4 15/07/2004

Eternal Flame

International

Co.

No.27 Allay 1,

Lane 94 Taipet,

Taiwan,

Not Sold Brand new China 20 9 5,233,151 1,405,319

Grooved Drum Winder 4 Not Sold 20 9 5,486,828 1,473,443

Auto Controlled Steam

Dryer

3

15/07/2004

Eternal Flame

International

Co.

No.27 Allay 1,

Lane 94 Taipet,

Taiwan, Not Sold

Brand new China

20 9 3,459,908 929,130

Computerized Cone

Dyeing Machine 7

15/09/2004

Eternal Flame

International

Co. No.27 Allay 1,

Lane 94 Taipet,

Taiwan,

Not Sold

Brand new Taiwan

20 9

35,440,20

6 9,517,176

Air Tank 1 Not Sold 20 9 104,178 27,977

Air Filter 3 Not Sold 20 9 833,713 223,885

Hand Plalet 3 Not Sold 20 9 138,952 37,315

Grane & Rail 1 Not Sold 20 9 2,146,276 576,366

Petal Curved Hydro

extractor 3 Not Sold 20 9 4,425,091 1,188,323



3 HP Sus Pump 1

Not Sold

20 9 85,509 22,963

1/2 HP Sus pump 1 Not Sold 20 9 38,265 10,277


Boiler

1

15/09/2004

Eternal Flame

International

Co.

No.27 Allay 1,

Lane 94 Taipet,

Taiwan, Not Sold

Brand new Taiwan

20 9 8,353,161 2,243,174

High Frequency Fiber

Dyeing

1

15/09/2004

Eternal Flame

International

Co.

No.27 Allay 1,

Lane 94 Taipet,

Taiwan, Not Sold

Brand new Taiwan

20 9 6,641,200 1,783,439

MT-200 Crane 2

15/09/2004 Shepherd

Shing Trading

4FL-1,250 Sec-4,

Hsiao E

RD,Taipei,

Taiwan

Not Sold

Brand new Taiwan

20 9 403,317 108,308

Electric Scale

2 Not Sold 20 9 92,635 24,876

Deep Tube Well

1 27/05/2004

Milnars pump

ltd. Local Purchase Not Sold Brand new

20 9 617,565 165,843

Deep Tube Well

1 08/06/2004

Milnars pump

ltd. Local Purchase Not Sold Brand new

20 9 430,146 115,511

Gas generator 1 26/06/2004 Bangla cat Local Purchase Not Sold Brand new 20 9 210,841 56,621

Gas Generator

1

31/05/2005 Caterpiller

Inc.

No.27 Allay 1,

Lane 94 Taipet,

Taiwan, Not Sold

Brand new USA

20 10

29,753,66

9 8,877,894

Air Compressor

1

31/05/2005

Puma

Industrial Co.

Ltd.

70 Tien-Chung,

Chang-HWA,

Taiwan,520. Not Sold

Brand new Taiwan

20 10 475,986 142,024

High Frequency Fiber

Drying

1

26/06/2005

Eternal Flame

International

Co.

No.27 Allay 1,

Lane 94 Taipet,

Taiwan, Not Sold

Brand new Taiwan

20 10 7,162,839 2,137,247

Diesel Generator

1 03/05/2005

International

Leasing Local purchase Not Sold Brand new

20 10 6,158,820 1,837,668

Drying Machine

1 01/06/2005

International

Leasing Local purchase Not Sold Brand new

20 10 1,690,348 504,367

Cone Dyeing Machine

8sets

17/05/2005

Phoenix

Leasing Co

Ltd Local purchase Not Sold

Brand new

20 10

15,404,31

1 7,003,291

Color matching light

box with standard

accessories

4 Sets

28/07/2006 Shepherd

Shing Trading

4FL-1,250 Sec-4,

Hsiao E

RD,Taipei,

Taiwan Not Sold

Brand new Taiwan

20 11 585,880 194,239



Computerized Cone

Dyeing Machine

2 22/12/2006 Shepherd Shing

Trading

4FL-1,250 Sec-4,

Hsiao E

RD,Taipei,

Taiwan

Not Sold Brand new Taiwan 20 11 5,015,728 1,662,879

Knitting Machine 19 15/06/2006 RSS Trade

International

104, Irish Noor

Jahan Tower,

Kakrail, Dhaka

Not Sold Brand new Taiwan 20 11 565,782 187,575

Resin Tank 1 16/02/2007 Eternal Flame

International Co.

No.27 Allay 1,

Lane 94 Taipet,

Taiwan,


Auto Controlled Lab

Dyeing


Trading

4FL-1,250 Sec-4,

Hsiao E

RD,Taipei,

Taiwan


Dyeing Machine 14 15/11/2007 Eternal Flame

International Co.

No.27 Allay 1,

Lane 94 Taipet,

Taiwan,


Water pump 1 17/05/2007 Sigma Pump Ltd Local purchase Not Sold Brand new 20 12 600,967 221,378

Deep tubewell 1 03/06/2007 Shahid

Engineering

Local purchase Not Sold Brand new 20 12 209,153 77,046

Cone Dyeing Machine

with Accessories

11 24/01/2008 Eternal Flame

International

No.27 Allay 1,

Lane 94 Taipet,

Taiwan,


Dyeing Machine

Accessories

420pcs 25/03/2008 Shepherd Shing

Trading

4FL-1,250 Sec-4,

Hsiao E

RD,Taipei,

Taiwan


Lab Sacker Machine 1 16/04/2008 Shepherd Shing

Trading

4FL-1,250 Sec-4,

Hsiao E

RD,Taipei,

Taiwan


Soft Winding Machine 1 26/05/2008 Eternal Flame

International

No.27 Allay 1,

Lane 94 Taipet,

Taiwan,


Hydro Machine 1 11/06/2008 Moon Local Purchase Not Sold Brand new - 20 13 3,751,353 1,535,429



Engineering

Works

Winding Machine 1 12/06/2008 Moon

Engineering

Works

Local Purchase Not Sold Brand new - 20 13 2,434,028 996,248

Air Compressor 1 10/07/2008 Shepherd Shing

Trading

4FL-1,250 Sec-4,

Hsiao E

RD,Taipei,

Taiwan

Not Sold Brand new Taiwan 20 13 1,145,663 468,920

Dyeing Machine 1 25/11/2008 Shepherd Shing

Trading

4FL-1,250 Sec-4,

Hsiao E

RD,Taipei,

Taiwan

Not Sold Brand new Taiwan 20 13 4,184,260 1,712,618

Knitting Machine 1 25/11/2008 Eternal Flame

International

No.27 Allay 1,

Lane 94 Taipet,

Taiwan,

Not Sold Brand new China 20 13 637,730 261,024

Water pump 1 04/03/2008 Milners Pump

Ltd.

Local Purchase Not Sold Brand new 20 13 167,588 68,593

Water pump 1 23/04/2008 Milners Pump

Ltd.


Water pump 1 01/06/2008 Pragati

Corporation


Air tank 1 20/11/2008 Bhandar Sharif Local Purchase Not Sold Brand new 20 13 229,249 93,833

Sludge Pump 1 19/07/2009 Equip well

Marketing

43300 Seri

Kembangan,

Slangor Darul

ehsan ,

Not Sold Brand new Malaysia 20 14 157,562 71,656

Filter Press 1 Not Sold 20 14 1,147,723 521,958

Packing & Freight

Charge

1 Not Sold 20 14 94,377 42,921

Effluent Treatment

Plant

1 08/02/2009 Sarker Steel Local Purchase Not sold Brand new - 20 14 240,108 109,196

Water Pump 1 01/03/2009 Milnars pump ltd. Local Purchase Not sold Brand new - 20 14 61,096 27,785

Air Compressor

Machine

1 08/03/2009 Puma

BangladeshLtd.

Local Purchase Not sold Brand new - 20 14 50,543 22,987

Auto Cone Machine 1 22/03/2009 Sarker Steel Local Purchase Not sold Brand new - 20 14 222,169 101,037

Water Pump 1 26/05/2009 Milnars Pump

Ltd.


Effluent treatment

plant

1 06/08/2009 Sarker Steel Local Purchase Not sold Brand new - 20 14 18,107 8,235



Water Pump 1 13/09/2009 Milners Pump

Ltd.


Wax dice machine 1 25/10/2009 Dider Engineering Local Purchase Not sold Brand new - 20 14 27,771 12,630

Dryer Machine with

Accessories

1 10/05/2010 Eternal Flame

International

No.27 Allay 1,

Lane 94 Taipet,

Taiwan,

Not sold Brand new China 20 15 2,203,406 1,113,401

Dyeing Machine with

Accessories

1 Not sold 20 15 4,529,650 2,288,873

Water Pump 1 10/08/2010 Milnars Pumps

Ltd.


Wax dice machine 1 07/09/2010 Dider Engineering

Ltd.


Crane with Standard

Accessories

2 10/01/2011 Trade Asia Int'PTE

Ltd

Not sold Brand new - 20 16 403,129 226,339

Spare Parts Winding

Machine

1 lot 27/02/2011 Eternal Flame

International

No.27 Allay 1,

Lane 94 Taipet,

Taiwan,

Not sold Brand new China 20 16 364,527 204,666

Dryer Machine with all

standard accessories

1 40877 Full Harvest Ltd. 12F, 336-1, Shing

Yeh W.RD. Chia-

Yi City, Taiwan


Lab Dyeing Machine 1 Not sold 20 16 276,273 155,116

Dryer Machine 6 Not sold 20 16 3,223,189 1,809,674

Hydro Accessories 2 Not sold 20 16 2,332,975 1,309,858

160 KW Inverter 1 10/07/2011 Puma

Engineering

Automation


Dryer Machine 1 05/04/2012 Shepherd Shing

Trading

4FL-1,250 Sec-4,

Hsiao E

RD,Taipei,

Taiwan

Not sold Brand new Taiwan 20 17 1,165,153 726,866

Dryer Machine 1 03/05/2012 Shepherd Shing

Trading

4FL-1,250 Sec-4,

Hsiao E

RD,Taipei,

Taiwan

Not sold Brand new Taiwan 20 17 1,707,553 1,065,236

Air splicer Machine 1 10/04/2012 Full Harvest Ltd. 12F, 336-1, Shing

Yeh W.RD. Chia-

Yi City, Taiwan


50 HP Screw type air

compressor


Trading

4FL-1,250 Sec-4,

Hsiao E

RD,Taipei,

Not sold Brand new Taiwan 20 17 926,276 577,847



Taiwan

Hydro Extractor

Centrifugal

1 16/09/2012 Full Harvest Ltd. 12F, 336-1, Shing

Yeh W.RD. Chia-

Yi City, Taiwan

Not sold Brand new - 20 17 13,309,57

4

8,303,018

Centrifugal Pump 1 set 07/06/2012 The Milners

Pump

Local purchase Not sold Brand new - 20 17 561,747 350,440

Constant Pressure

water pump & Control

Panel

1 Set 03/01/2013 Full Harvest Ltd. 12F, 336-1, Shing

Yeh W.RD. Chia-

Yi City, Taiwan


Machine with

Accessories& Spare

Parts

1 lot 08/03/2013 Full Harvest Ltd. 12F, 336-1, Shing

Yeh W.RD. Chia-

Yi City, Taiwan


Water Pump 1 set 07/05/2013 Milners Pump

Ltd.


Moulding Machine with


1 set 15/02/2014 Shepherd Shing

Trading

4FL-1,250 Sec-4,

Hsiao E

RD,Taipei,

Not sold Brand new - 20 19 9,615,412 7,405,505

Centrifugal Pump 1 set 15/01/2014 Milners Pump

Ltd.


Water Pump 1 set 01/11/2014 Milners Pump

Ltd.


Hydro Extractor with


2 42014 Full Harvest Ltd. 12F, 336-1, Shing

Yeh W.RD. Chia-

Yi City, Taiwan


Laboratory Dyeing

Machine

2 Not sold 20 20 257,073 219,989

Screw Air Compressor 1 26/11/2015 Shepherd Shing

Trading

4FL-1,250 Sec-4,

Hsiao E

RD,Taipei,

Taiwan

Not sold Brand new Taiwan 20 20 412,388 352,898

Knitting Machine 12GG 14 13/09/2015 Farid Sweing &

Kniting Center


Electric Motor Purchase 1 30/12/2015 Milners Pump

Ltd.


Sample Knitting

Machine

18 31/12/2015 Farid Sweing &

Kniting Center


Sample Knitting

Machine

22 31/12/2015 Farid Sweing &

Kniting Center


Generator 1 01/06/2005 Caterpiller Inc. 7 Tractor Road, Not sold Brand new United 20 10 21,351,97 7,865,430



Singapore

627968

State 8

Hank Dyeing Machine 1 31/08/2005 Ah Choi

Machinery Works

7C, Sheung Hei

Street, San Po

Kong, Kowloon,

Hong Kong

Not sold Brand new China 20 10 1,881,869 693,225

Hank Dyeing Machine 1 31/08/2005 Ah Choi

Machinery Works

7C, Sheung Hei

Street, San Po

Kong, Kowloon,

Hong Kong


Hank real Machine 1 26/10/2005 Eternal Flame

International

No.27 Allay 1,

Lane 94 Taipet,

Taiwan,


Deep Tubewel 1 26/10/2005 Purbachan

Drelars

Local purchase Not sold Brand new 20 10 1,957,435 721,061

Digital Truck weighting

Scale

1 28/12/2005 Bengal Scale Local purchase Not sold Brand new 20 10 1,087,854 400,733

Dyeing Machine 2 01/04/2006 Shepherd Shing

Trading

4FL-1,250 Sec-4,

Hsiao E

RD,Taipei,

Taiwan

Not sold Brand New Taiwan 20 11 803,947 296,150

Packing Machine 1 Not sold 20 11 669,956 246,792

Computerized Dyeing

Machine

42 29/01/2007 Shepherd Textile

Ltd.

Local purchase Not sold Recondition - 20 11 59,177,60

5

21,799,260

Deep Tube-well 1 11/04/2006 Tanvir & Co. Local purchase Not sold Brand new - 20 11 221,471 81,583

Centrifugal pump 1 06/06/2006 Milnars Pump

Ltd.


Gas Burn Boiler 1 10/07/2006 Moon

Engineering

Works


Gas Burn Boiler 1 25/07/2006 Moon

Engineering

Works


Packing Machine 1 13/02/2008 Eternal Flame

International

No.27 Allay 1,

Lane 94 Taipet,

Taiwan,

Not sold Brand new - 20 12 270,243 110,610


International

No.27 Allay 1,

Lane 94 Taipet,

Taiwan,

Not sold Brand new - 20 12 2,587,491 1,059,060



Mixture Machine 1 07/05/2007 Al-Noor Scintific Local purchase Not sold Brand new - 20 12 95,385 39,041

Centrifuge Pump 1 02/03/2008 Minars pump Ltd. Local purchase Not sold Brand new 20 12 264,498 108,260


International

No.27 Allay 1,

Lane 94 Taipet,

Taiwan,

Not sold Brand New China 20 13 255,327 116,118

Dyeing Machine 1 Not sold 20 13 442,566 201,269


Dyeing Machine 2 Not sold 20 13 1,514,939 688,961


Dryer Machine 6 Not sold 20 13 2,655,399 1,207,615

Winding Machine 12 06/06/2008 Eternal Flame

International

No.27 Allay 1,

Lane 94 Taipet,

Taiwan,

Not sold Brand new - 20 13 1,248,264 567,683

Yarn Stretcher 4 Not sold 20 13 127,663 58,058

Hanks Machine 1 08/04/2008 Techno Tower

Co. Ltd.

Local purchase Not sold Brand New -- 20 13 87,248 39,679


Co. Ltd.

Local purchase Not sold Brand New - 20 13 168,867 76,799


Co. Ltd.


Dryer machine 200pcs. 01/02/2010 Eternal Flame

International

No.27 Allay 1,

Lane 94 Taipet,

Taiwan,

Not sold Brand New China 20 14 620,116 313,351

7GG Kniting Machine 1 09/07/2009 Farid Sweing &

Knitting Center


Winding Machine 1 22/03/2010 Farid Sweing &

Knitting Center


Boiler Diz 1 16/10/2010 Dong Bng Textiles

Ltd.

Local purchase Not sold Brand New - 20 15 3,565,081 2,001,630

Spacco 200 RT Cooling

tower

1 13/03/2012 RSS Trade

International


Motor Pump 1 06/05/2012 Gazi International Local purchase Not sold Brand New - 20 17 147,410 102,177

Dyeing Machine 2 13/03/2014 Sonic Engle 167, Dingcheng

3rd st, Xindian

dist. New Taipet

city 231 , Taiwan

Not sold Brand New - 20 18 3,152,094 2,427,650

Knitting Machine 1 31/03/2015 Farid Sweing &

Knitting Center

Not sold Local 20 19 22,000 18,826



ix) Details of the machineries required to be bought by the issuer, cost of the machineries, name of the suppliers, date of placement of order and the date or

expected date of supply, etc.

No machineries are required to be bought by the issuer except machineries to be bought from IPO proceeds as under: Sl. List of Machineries For Washing Plant and BMRE Quantity

Sets

Already

Arrived

Date of BOE To be

arrived

Name of the

suppliers

Date of Placement

Order

Date or Expected

date of Supply

1 Radio Frequency Dryer for yarn packages with standard accessories 1 1 02/02/2016 -

Radio Frequency Dryer for yarn packages with standard accessories 1 1 04/05/2016 -

2 Hank to Cone Winding Machine 24 Spindles with standard accessories 20 20 10/01/2016 - Sonic Eagle

No 167, Dingcheng

3rd

ST, Xindian Dist,

New Taipei City 231

, Taiwan ROC , Tel-

+886963-099092

Some Machinery

(mentioned here) have

already arrived and for

the rest the company

will place order by

December, 2016

through 360 days

deferred L/C the

payment of which will

be made after

receiving the IPO

proceeds

120 days from

placement of order

3 Horizontal Yarn Expansion Machine with standard accessories 5 5 10/01/2016 - 4 Yarn Pressure and Yarn Carrier Machine with Standard Accessories - i Mode No YS20T 1 1 16/01/2016 - ii Mode No YS10T 1 1 16/01/2016 - 5 Industrial Washing Machine With standard accessories 40 20 22/02/2016,25/05/2016 20 6 Industrial Washing Machine With standard accessories 12 6 22/02/2016 6 7 Industrial Drying Machine with Standard Accessories 40 20 22/02/2016 &

25/05/2016

20

8 Industrial Drying Machine with Standard Accessories 4 2 22/02/2016 2 9 Industrial Hydro Extractor with Standard Accessories 4 2 25/05/2016 2

10 Industrial Hydro Extractor with Standard Accessories 4 2 22/02/2016 2 11 Hand Brushing Machine with Standard Accessories 30 15 22/02/2016 15 12 Screw Air Compressor 4 2 25/05/2016 2 13 Industrial Trolley for Dyeing with Standard Accessories 80 40 22/02/2016 &

25/05/2016

40

14 Industrial Pallet Truck 4 2 22/02/2016 2 15 Dyeing Machine 2 2 - 16 Industrial Ozone Sterilizing machine with standard accessories 2 2 25/05/2016 - 17 Industrial Air cooler 16 16 22/03/2016 - Total

*The company has planned to establish the Washing plant and expansion of the dyeing unit within the shortest possible time so that the proposed projects can start generating revenue. In view of the above the company

already started importing the machineries through 360 days deferred L/C and the payment of which will be made after receiving the IPO proceeds. For the remaining machineries to be imported; the company has not

placed any order yet. However, the management will place the order soon.



(x) In case the machineries are yet to be delivered, the date of quotations relied upon for the cost

estimates given shall also be mentioned;

No machineries are required to be bought by the issuer except the machineries to be bought from

IPO proceeds. There are no such machineries which are yet to be delivered.

(xi) If plant is purchased in brand new condition then it should be mentioned;

All the plants and machineries are in good condition and most of them are brand new except some

re-conditioned machineries.

DECLARATION RELATED TO MACHINERIES

We do hereby certify that all the plants and machineries of the company are brand new except the

following reconditioned machineries as under:

Sl Name of Machinery Qty.

1 Computerized Controlled Dyeing Machine with all standard accessories 1

2 Hank Dyeing Machine with all standard accessories 1

3 Computerized Hank Dyeing Machine with all standard accessories 1

4 Computerized Controlled Dyeing Machine 2

5 Computerized Dyeing Machine 10LBS with all standard accessories 1

6 Sampling Machine 10 LBS with all standard accessories 2

7 Juki Brand Machine with all standard accessories 2




11 Hydro Extractor with all standard accessories 1

12 Hydro Extractor with all standard accessories 1

13 Packing Machine with all standard accessories 1

14 Auto steam Dryer with all standard accessories 1

15 Boiler with all standard accessories 1

16 Horizontal Smoke Tube Boiler with all standard accessories 1

17 Boiler with all standard accessories 1

18 Generator with all standard accessories Model No: 200GF142 1

19 Generator with all standard accessories 1

20 Filter Tank with all standard accessories 1

21 Resin Tank with all standard accessories 1

22 Hand Driven Machine 3.5 G 2

23 Hand Driven Machine 5 G 2



26 Linking Machine 5 G 1







Total 42

All the machineries are running in good condition.

Place: Dhaka


Sd/-

Mahfel Huq & Co.




(xii) Details of the second hand or reconditioned machineries bought or proposed to be bought, if any,

including the age of the machineries, balance estimated useful life, etc. as per PSI certificates of

the said machineries as submitted to the Commission;

The Company has no plan to purchase any second hand or reconditioned machineries. There are

some second hand/re-conditioned machineries in company’s possession. List of reconditioned

machineries purchased by the company after due verification is as under:

Sl Name of Machinery Qty. Unit Price

US$

Total Price

US$

Age of

Machinery

Remaining

useful life

1 Computerized Controlled Dyeing Machine with all


1 106,173 106,173 9 Years 7-10 Years

2 Hank Dyeing Machine with all standard

accessories

1 81,900 81,900 9 Years 7-10 Years

3 Computerized Hank Dyeing Machine with all


1 7,500 7,500 9 Years 7-10 Years

4 Computerized Controlled Dyeing Machine 2 1,900 3,800 9 Year s 7-10 Years

5 Computerized Dyeing Machine 10LBS with all


1 15,050 15,050 9 Years 7-10 Years

6 Sampling Machine 10 LBS with all standard

accessories

2 5,300 10,600 9 Years 7-10 Years

7 Juki Brand Machine with all standard accessories 2 500 1,000 9 Years 7-10 Years

8 Juki Brand Machine with all standard accessories 1 1,010 1,010 9 Years 7-10 Years



11 Hydro Extractor with all standard accessories 1 9,000 9,000 9 Years 7-10 Years

12 Hydro Extractor with all standard accessories 1 15,086 15,086 9 Years 7-10 Years

13 Packing Machine with all standard accessories 1 19,000 19,000 9 Years 7-10 Years

14 Auto steam Dryer with all standard accessories 1 22,600 22,600 9 Years 7-10 Years

15 Boiler with all standard accessories 1 98,800 98,800 9 Years 7-10 Years

16 Horizontal Smoke Tube Boiler with all standard

accessories

1 15,000 15,000 9 Years 7-10 Years

17 Boiler with all standard accessories 1 22,800 22,800 9 Years 7-10 Years

18 Generator with all standard accessories Model

No: 200GF142

1 57,000 57,000 9 Years 7-10 Years

19 Generator with all standard accessories 1 15,000 15,000 9 Years 7-10 Years

20 Filter Tank with all standard accessories 1 11,400 11,400 9 Years 7-10 Years

21 Resin Tank with all standard accessories 1 13,110 13,110 9 Years 7-10 Years

22 Hand Driven Machine 3.5 G 2 322 644 9 Years 7-10 Years

23 Hand Driven Machine 5 G 2 307 614 9 Years 7-10 Years



26 Linking Machine 5 G 1 232 232 9 Years 7-10 Years





4 45,600 182,400 9 Years 7-10 Years



1 30,400 30,400 9 Years 7-10 Years



1 17,100 17,100 9 Years 7-10 Years



1 8,550 8,550 9 Years 7-10 Years

Total 42 772,893

*Shepherd Industries Limited bought the above reconditioned machineries in the year 2007 for which it

was not necessary to get the machineries inspected before shipment as well as the PSI certificate as the

re-conditioned machineries were not imported from abroad rather bought from Shepherd Textile (BD)

Limited located in the Export Processing Zone during that time. We have provided a post Landing

Inspection certificate from Beauraue Veritas (Bureau Veritas is an inspection company incorporated in

France) about the present condition and remaining estimated life of the aforesaid re-conditioned

machineries.



xiii) A physical verification report by the issue manager(s) regarding the properties as submitted to

the Commission;

PHYSICAL VERIFICATION REPORT BY THE ISSUE MANAGER(S)

Of


This is to certify that we have visited the registered office and factory of Shepherd Industries Limited on March

20, 2016 and April 06, 2016 respectively and we have found the registered office and factory as details bellow:

Visited and Accompanied by:

Particulars Name & Designation Company

Visited by : Noor Ahamed FCA

CEO & Managing Director Alpha Capital Management Limited

Accompanied by :

Md. Ataur Rahman

Chief Financial Officer Shepherd Industries Limited

Mohammed Abu Zafar

Company Secretary

Registered Office:

The registered office of the company is located at House#24, Road#04, Sector#04, Uttara Model Town, Dhaka-

1230.

Location of the Factory

Bagrapara, Kathalia, Bhaluka, Mymensingh.

Nature of Business

The company is engaged in dyeing of different counts and types of yarn and to market the processed yarn as

deemed exporter.

Products

Dyeing of various types of cotton, Acrylic, Wool, Nylon Viscose blended yarn.

Description of Property:

We have identified the properties of Shepherd Industries Limited are as follows:

1) Office Building: 6 storied building 3811.19 sft/floor at House#24, Road#04, Sector#04, Uttara Model

Town, Dhaka-1230. Total area of land is 11.82 decimal.

2) Land: We have found 1,754 decimals of land surrounded by boundary wall at Bagrapara, Kathalia,

Bhaluka, Mymensingh.

Factory Building: Details of the buildings status are as follows:



No of

Building

Building

Description

Type (Brick/Tin/Prefabricated Steel) Total Building

Area Each floor

(sft)

Usages

(sft)

Building-1 Three

separate Still

Structured

Shed

Pre-fabricated steel structured building for

manufacturing

59,965 59,965

Building-2 36,301 36,301

Building-3 71,204 71,204

Building-4 Three Storied

R.C.C building, Executive dormitory,

Canteen & Child Care:

RCC-Grade Beam, RCC-Floor Slab, RCC-

Pillar, RCC-Slab with Beam, RCC-Stair, RCC-

Lintel, Brick Wall, Plaster, Wall Paint,

Inside wall- Plastic Paint, Outside Wall-

Weather Coat Thai Aluminum & 5mm

Glass in window, Door, M.S Grill in

Window.

2,148 6,444

Building-5 Two storied

R.C.C Building for Gas Generator:

RCC-Grade Beam, RCC-Floor Slab, RCC-

Pillar, RCC-Slab with Beam, RCC-Stair, RCC-

Lintel, Brick Wall, Plaster, Wall Paint,

Inside wall- Plastic Paint, Outside Wall-

Weather Coat, Thai Aluminum & 5mm

Glass in window, Door, M.S Grill in

Window

1,598.625 3,197.25

Building-6 Six storied

R.C.C building for ware house:

RCC- Slab with Beam, RCC-Lintel, Brick

Wall Plaster, Wall Paint, Inside side, Plastic

Paint, Outside Wall- Weather Coat, Thai

Aluminum & 5mm Glass in window

9,500 57,000

Building-7 Semi pucca

Semi pucca building for workers

dormitory:

Brick Wall & Teen Shed Roof with M.S

angle

3,000 3,000


Semi pucca building for factory office:


angle

3,000 3,000


Semi pucca building for executive

dormitory:


angle

3,000 3,000

Building-10 Tin Shed

5 separate Tin shed warehouse :

Brick Pillar & Teen Shed Roof with M.S

angle.

7,000 7,000



3) Plant & Machinery and Office Equipment:

Name of Machinery Nos. of Machinery(Set/Pcs) Condition

3 Bed Flowing Softener 1 Brand new

Filter Tank GLD 2000 1

Stainless Water Tank Sxy 1

Air Tank 1

Horizontal Smoke-Tube Boiler 1 Brand new

Horizontal Smoke-Tube Boiler 1

Rapid Lab Dyeing Machine 1 Brand new

Rapid Lab Dyeing Machine 2

Hot Circulator Oven RHD 1

Whole Set Lab Bottles 1

Electric Precise Scale 1

Electric MRW-30 3

Accessories for Lab Dying achine 1 lot

30 HP Pump 1

5HP Pump 3

Air Compressor Pump 1

Petal Curved 2

Boiler 1

Overhaul 2

Trolley Spare Parts 2

Soft Winder with Inverter 3 Brand new

Grooved Drum Winder 3

Computerized Cone Dyeing Machine 6 Brand new

Preheating Tank 2

Auto Controlled steam 2

Dyeing Tube 20000Pcs

Diesel Generator 250KVA 2 Brand new

Accessories for Machine 1 lot Brand new

Dyeing Machine GFS-10 5 Brand new

Crane & Rail 1 Brand new

Installation Charge 1 -

Deep Tube Well 1 Brand new

Water Tank 1 Brand new

Oil Tank 1 Brand new



Water Iron Removing Filter 1 Brand new



Automatic Dispensing System and Copower 1 Brand new

Heating Apparatus 3 Brand new

Auto Controlled Steam Dryer 2 Brand new

Petal Curved Hydro extractor 1 Brand new

Computerized Cone Dyeing Machine 1

Hand Pallet Truck 2

Air Filter Machine 2





Effluent treatment plant 1 Brand new

Gas Generator 1 Brand new



Auto Controlled Steam Dryer 3 Brand new


Air Tank 1

Air Filter 3

Hand Plalet 3

Grane & Rail 1

Petal Curved Hydro extractor 3

3 HP Sus Pump 1

1/2 HP Sus pump 1

Horizontal Smoke-Tube Boiler 1 Brand new

High Frequency Fiber Dyeing 1 Brand new

MT-200 Crane 2 Brand new

Electric Scale 2



Gas generator 1 Brand new

Gas Generator 1 Brand new

Air Compressor 1 Brand new

High Frequency Fiber Drying 1 Brand new

Diesel Generator 1 Brand new

Drying Machine 1 Brand new

Cone Dyeing Machine 8sets Brand new

Color matching light box with standard accessories 4 Sets Brand new


Knitting Machine 19 Brand new

Resin Tank 1 Brand new

Auto Controlled Lab Dyeing 1 Brand new

Dyeing Machine 14 Brand new

Water pump 1 Brand new

Deep tubewell 1 Brand new

Cone Dyeing Machine with Accessories 11 Brand new

Dyeing Machine Accessories 420pcs Brand new

Lab Sacker Machine 1 Brand new

Soft Winding Machine 1 Brand new

Hydro Machine 1 Brand new

Winding Machine 1 Brand new

Air Compressor 1 Brand new


Knitting Machine 1 Brand new




Air tank 1 Brand new

Sludge Pump 1 Brand new

Filter Press 1

Packing & Freight Charge 1



Effluent Treatment Plant 1 Brand new

Water Pump 1 Brand new

Air Compressor Machine 1 Brand new

Auto Cone Machine 1 Brand new


Effluent treatment plant 1 Brand new


Wax dice machine 1 Brand new

Dryer Machine with Accessories 1 Brand new

Dyeing Machine with Accessories 1


Wax dice machine 1 Brand new

Crane with Standard Accessories 2 Brand new

Spare Parts Winding Machine Brand new

Dryer Machine with all standard accessories 1 Brand new

Lab Dyeing Machine 1

Dryer Machine 6

Hydro Accessories 2

160 KW Inverter 1 Brand new

Dryer Machine 1 Brand new

Dryer Machine 1 Brand new

Air splicer Machine 1 Brand new

50 HP Screw type air compressor 1 Brand new

Hydro Extractor Centrifugal 1 Brand new

Centrifugal Pump 1 set Brand new

Constant Pressure water pump & Control Panel 1 Set Brand new

Machine with Accessories& Spare Parts 1 lot Brand new

Water Pump 1 set Brand new

Moulding Machine with standard accessories 1 set Brand new

Centrifugal Pump 1 set Brand new

Water Pump 1 set Brand new

Hydro Extractor with standard accessories 2 Brand new

Laboratory Dyeing Machine 2

Screw Air Compressor 1 Brand new

Knitting Machine 12GG 14 Brand new

Electric Motor Purchase 1 Brand new

Sample Knitting Machine 18 Brand new

Sample Knitting Machine 22 Brand new

Generator 1 Brand new

Hank Dyeing Machine 1 Brand new

Hank Dyeing Machine 1 Brand new

Hank real Machine 1 Brand new

Deep Tubewel 1 Brand new

Digital Truck weighting Scale 1 Brand new

Dyeing Machine 2 Brand New

Packing Machine 1

Computerized Dyeing Machine 42 Recondition

Deep Tube-well 1 Brand new

Centrifugal pump 1 Brand new

Gas Burn Boiler 1 Brand new

Gas Burn Boiler 1 Brand new



Packing Machine 1 Brand new


Mixture Machine 1 Brand new

Centrifuge Pump 1 Brand new


Dyeing Machine 1

Dyeing Machine 1

Dyeing Machine 2

Dyeing Machine 1

Dryer Machine 6

Winding Machine 12 Brand new

Yarn Stretcher 4

Hanks Machine 1 Brand New



Dryer machine 200pcs. Brand New

7GG Kniting Machine 1 Brand New

Winding Machine 1 Brand New

Boiler Diz 1 Brand New

Spacco 200 RT Cooling tower 1 Brand New

Motor Pump 1 Brand New


Knitting Machine 1

4) ETP: The Company hasmodern biological Effluent Treatment Plant (ETP) consisting of 6 (Six) large water

tanks with capacity of holding 4,300 cubic meter per day to purify the said waste water biologically. The

company also follows the rules and guidelines, policies and directives of the environment department.

5) Fire Fighting Equipment:

List of Fire Fighting Equipment are as follows:

SL. NO Details Quantity

1 Fire Extinguisher 73

2 Fire Alarm 1

3 Fire Hose Pipe box 16 sets

4 Motor Control Panel 1 set

5 Installation & Others

Total

Besides these assets we have also found other assets like Furniture & Fixture, Vehicles, Electrical Substation,

Electrical Equipment, Tube Well and Others.

It is also mentionable here that during our visit, we also checked Inventory register and roster (Workers’ duty

register) and found satisfactory. We also noticed that all machineries of SIL are in good condition and running

well.

6) Signboard:

The signboard of the Company is well displayed at the factory premises.

Place: Dhaka

Date: November 09, 2016

Sd/-

Noor Ahamed, FCA




(xiv) If the issuer is entitled to any intellectual property right or intangible asset, full description of the

property, whether the same are legally held by the issuer and whether all formalities in this

regard have been complied with;

The Company has no intellectual property right but is has intangible asset i.e. software and

software development. Written down value of which as on 30.06.2016 is Tk. 169,068 and it is

legally held by the company.

(xv) Full description of other properties of the issuer:



as on June 30, 2016

Amount in Taka

Particulars Written Down Value as on

30-06-16

Building - Factory 111,370,979

Land & Land Development 263,658,642

Plant & Machinery 167,499,919

ETP 45,760,672

Electric Equipment & Line Installation 10,628,135

Fire Fighting Equipment 475,191

Tools & Equipments 9,554,843

Gas Line Installation 2,391,584

Building - Head Office 51,663,152

Office Equipment 5,234,278

Air Conditioner & Electric Appliance 1,125,394

Lift - Head Office, Uttara 1,245,507

Furniture & Fixture 2,197,361

Office Decoration 1,323,603

Car & Vehicles 20,378,008

Telephone Equipments 1,604,039

Sub Total 696,111,307

REVALUATION PART

Land & land Development 547,605,914

Building 90,518,456

Sub Total 638,124,370

Total as on 30.06.2016 1,334,235,677

Total as on 31.03.2016 1,302,877,602



Details of the factory Building:

No of Building Building

Description

Type (Brick/Tin/Prefabricated Steel) Total Building Area

Each floor (sft)

Usages (sft)

Building-1 Three separate

Still Structured

Shed

Pre-fabricated steel structured building for

manufacturing

59,965 59,965

Building-2 36,301 36,301

Building-3 71,204 71,204


R.C.C building, Executive dormitory, Canteen &

Child Care-

RCC-Grade Beam, RCC-Floor Slab, RCC-Pillar,

RCC-Slab with Beam, RCC-Stair, RCC-Lintel,

Brick Wall, Plaster, Wall Paint, Inside wall-

Plastic Paint, Outside Wall- Weather Coat Thai

Aluminum & 5mm Glass in window, Door, M.S

Grill in Window.

2,148 6,444


R.C.C Building for Gas Generator-

RCC-Grade Beam, RCC-Floor Slab, RCC-Pillar,

RCC-Slab with Beam, RCC-Stair, RCC-Lintel,

Brick Wall, Plaster, Wall Paint, Inside wall-

Plastic Paint, Outside Wall- Weather Coat, Thai

Aluminum & 5mm Glass in window, Door, M.S

Grill in Window

1,598.625 3,197.25


R.C.C building for ware house-

RCC- Slab with Beam, RCC-Lintel, Brick Wall

Plaster, Wall Paint, Inside side, Plastic Paint,

Outside Wall- Weather Coat, Thai Aluminum &

5mm Glass in window

9,500 57,000

Building-7 Semi pucca Semi pucca building for workers dormitory-

Brick Wall & Teen Shed Roof with M.S angle 3,000 3,000

Building-8 Semi pucca Semi pucca building for factory office-


Building-9 Semi pucca Semi pucca building for executive dormitory-


Building-10 Tin Shed 5 separate Tin shed warehouse

Brick Pillar & Teen Shed Roof with M.S angle. 7,000 7,000

Head office Building:

Registered office 11.82 decimal land with 6 storied building Total 3811.19 sft/floor at House# 24, Road# 04,

Sector# 04, Uttara Model Town, Dhaka-1230.

ETP:

The Company has modern biological ETP established in the factory premises to purify the waste water.

Fire Fighting Equipment:

List of Fire Fighting Equipments are as follows:

SL. NO Details Quantity


2 Fire Alarm 1

3 Fire Hose Pipe box 16 sets

4 Motor Control Panel 1 set

Total



Car & Vehicles:

The company at present owns following car and vehicles:

SL # Vehicle Number Vehicle Type Chassis & Engine Number

1 DM-Gha-15-0041 Land cruiser prado TRJ150-0025568/ZTR-1145377

2 DM-Ga-17-0596 Hard Jeep, N/X Trail NT32-001331/MR20-514073B

3 DM-Ga-27-7098 Axio NZE141-6022160, 1NZ-C523275

4 DM-Ga-27-8253 X Corolla NZE121-0404078/1NZ-C259424

5 DM-Ga-27-5022 X Corolla NZE121-3283073, 1NZ-B352902

6 DM-Ga-22-5025 Probox NCP51-0256034, 1NZ-D815773

7 DM-Cha-53-8928 Hiace Micro TRH200-0102504/1TR-0782849

8 DM-Ma-11-0840 Covered Van (Small) LY102-0004049/5L-5120434

9 D.M-GA-29-2967 Car saloon NZT260-3048413/ 1NZ-D453053

10 DM-Cha-11-9792 Car saloon JN1CEAN16ZO-015229, QG13-

306556

11 D.M-CHA-53-4572 MICROBUS KR42-5074708/7K-0874032

12 DM-Ma-11-3767 COVERED VAN MAT5240004FSR03300,

497SPT29DUY15591

13 D.M-AU-14-1025 COVERED VAN MAT38653477R34946/

497TC93JSZ888500


Page | 85

(f) Plan of Operation and Discussion of Financial Condition:

(ii) If the issuer had been in operation, the issuer’s revenue and results from operation, financial position and changes in financial position cash flows for the last five

years or from commercial operation, which is shorter, shall be furnished in tabular from which shall, among others, include the following information:

The Company’s revenue and results from operations, Statement of Financial position, changes in financial position and statement of cash flows for the last five years are

mentioned below:

B) the statement of operating results of the company is as follow:

Particulars Amount in Taka

01-Apr-16

to

30-Jun-16

01-Apr-15

to

31-Mar-16

01-Jan-15

to

31-Mar-15

01-Jan-14

to

31-Dec-14

01-Jan-13

to

31-Dec-13

01-Jan-12

to

31-Dec-12

01-Jan-11

to

31-Dec-11

Re-stated Re-stated

Sales Revenue 756,861,925 2,636,557,896 390,141,810 1,780,751,795 1,878,484,554 1,883,339,590 1,179,310,883

Cost of Sales 669,410,501 2,331,681,538 346,930,751 1,576,699,811 1,667,224,358 1,732,311,277 1,067,359,827

Gross Profit 87,451,424 304,876,358 43,211,059 204,051,984 211,260,196 151,028,313 111,951,056

FC Gain/(Loss) -9,602,729 8,775,285 - - - - -

Less: Operating Expenses 14,282,881 51,242,737 7,666,970 22,651,894 28,880,864 26,144,032 28,103,743

Administrative expenses 12,305,498 42,533,765 7,367,962 21,233,510 26,642,038 24,593,968 26,821,347

Selling , Marketing & Distribution Expenses 1,977,383 8,708,972 299,008 1,418,384 2,238,826 1,550,063 1,282,396

- - - Operating Profit for the Year 63,565,814 262,408,906 35,544,089 181,400,090 182,379,332 124,884,281 83,847,313

Add: Other Income 12,466,474 8,772,225 749,707 5,278,561 7,611,179 6,517,548 3,484,615

Profit Before Financial Expenses and Tax 76,032,288 271,181,131 36,293,796 186,678,651 189,990,511 131,401,830 87,331,928

Less: Financial Expenses 16,131,226 123,982,237 21,950,951 94,903,033 135,797,935 129,299,474 86,133,559

Net profit before tax 59,901,062 147,198,894 14,342,845 91,775,618 54,192,576 2,102,355 1,198,369

Less: Income tax expense 11,701,414 15,858,066 2,301,368 15,462,577 19,223,204 315,353 179,755

Net profit/(Loss) after Tax for the Year 48,199,648 131,340,828 12,041,477 76,313,041 34,969,372 1,787,002 1,018,614

• Please see section 135 note-05 of the audited financial statement of 30 June 2016 for the reason of restatement in accounts.



Financial Position:

Particulars

Amount in Taka

01-Apr-16

to

30-Jun-16

01-Apr-15

to

31-Mar-16

01-Apr-2015 01-Jan-15

to

31-Mar-15

01-Jan-14

to

31-Dec-14

01-Jan-13

to

31-Dec-13

01-Jan-12

to

31-Dec-12

01-Jan-11

to

31-Dec-11

Re-stated Re-stated

NON-CURRENT ASSETS

Property, Plant & Equipment 1,334,235,677 1,302,877,602 1,354,364,604 830,378,882 834,781,166 754,374,214 676,087,949 684,962,135

Capital Work in Progress 50,407,119 43,123,793 - - - - - -

Intangible Asset 169,068 177,966 - - - - - -

Deferred Revenue Expenditure - - - - - 4,643,837 4,643,837

Total Non-Current Assets 1,384,811,864 1,346,179,361 1,354,364,604 830,378,882 834,781,166 754,374,214 680,731,786 689,605,972

CURRENT ASSETS

Inventory 1,184,165,958 1,380,280,441 1,268,250,601 689,510,352 799,961,176 781,725,397 792,562,751 609,129,692

Trade & other receivables 1,091,466,500 937,947,151 659,502,234 399,208,926 434,311,953 624,280,581 655,777,453 429,650,932

Investment 62,232,899 62,232,899 36,592,718 36,592,718 29,358,589 38,993,424 68,406,879 44,492,535

Advance, Deposits & Prepayments 77,844,133 74,963,426 60,975,070 47,414,639 52,144,201 42,967,179 42,263,764 19,491,488

Current a/c with related entity 15,100,000 29,100,000 279,349,957 373,407,931 371,738,996 260,840,604 242,768,630 242,768,630

Cash and Cash Equivalents 40,654,383 47,332,408 19,082,645 15,641,656 56,246,170 27,421,566 11,772,625 9,911,857

Total Current assets 2,471,463,873 2,531,856,325 2,323,753,225 1,561,776,222 1,743,761,085 1,776,228,751 1,813,552,102 1,355,445,135

TOTAL ASSETS 3,856,275,737 3,878,035,686 3,678,117,829 2,392,155,104 2,578,542,251 2,530,602,965 2,494,283,888 2,045,051,107

EQUITY & LIABILITIES

Equity attributable to share holders

Issued, Subscribed & paid up capital 1,042,059,860 1,042,059,860 191,194,000 88,574,000 88,574,000 88,574,000 88,574,000 88,574,000

Share Money Deposit 33,728,933 476,927,129 443,238,343 443,238,343 449,693,116 449,693,116 448,024,535

Revaluation Reserve 552,651,670 554,262,515 609,128,159 376,214,916 377,795,306 384,819,262 410,930,263 410,930,263

Retained earnings 353,760,682 303,605,008 157,668,849 32,355,290 18,733,423 -55,502,229 -39,865,601 -38,871,544

Total Shareholders’ equity 1,948,472,212 1,933,656,316 1,434,918,137 940,382,549 928,341,072 867,584,149 909,331,778 908,657,254

NON-CURRENT LIABILITIES

Long Term Foreign Loan - - 38,505,032 38,505,032 38,505,032 38,505,032 38,505,032 38,505,032

Deferred Tax Liability 119,181,887 119,542,249 131,165,464 81,152,358 81,653,857 82,851,877 - -

Obligation under Finance Lease 4,003,683 4,475,454 - - - - - -

Total non-current liabilities 123,185,570 124,017,703 169,670,496 119,657,390 120,158,889 121,356,909 38,505,032 38,505,032

CURRENT LIABILITIES

Trade & other Payables 968,869,108 1,043,939,623 867,628,960 561,066,650 919,635,893 1,081,766,139 845,663,373 359,961,022

Short Term Bank Loan 652,665,292 637,766,832 1,110,873,232 701,982,922 549,706,078 412,363,327 666,026,125 700,567,541

Liabilities for Expenses 127,561,187 136,922,468 95,027,004 69,065,593 60,700,319 47,532,441 34,757,580 37,360,259

Obligation under Finance Lease-Current Portion 1,793,435 1,732,744 - - - - -

Loan from shareholders 33,728,933 - - - - -

Total Current Liabilities 1,784,617,955 1,820,361,667 2,073,529,196 1,332,115,165 1,530,042,290 1,541,661,907 1,546,447,078 1,097,888,821

Total Liabilities 1,907,803,525 1,944,379,370 2,243,199,692 1,451,772,555 1,650,201,179 1,663,018,816 1,584,952,110 1,136,393,853

TOTAL EQUITY & LIABILITIES 3,856,275,737 3,878,035,686 3,678,117,829 2,392,155,104 2,578,542,251 2,530,602,965 2,494,283,888 2,045,051,107



Statement of Changes in Financial Position:

For the period ended June 30, 2016, March 31 2016, 2015 and for the year ended December 31 2014, 2013, 2012, 2011

Particulars Ordinary Share Capital Share Money Deposit Revaluation Reserve Retained Earnings Total

Balance as on December 31, 2011 88,574,000 448,024,535 410,930,263 -38,871,544 908,657,254



Balance as on December 31, 2014 88,574,000 443,238,343 377,795,306 18,733,423 928,341,072

Balance as on March 31, 2015 88,574,000 443,238,343 376,214,916 32,355,290 940,382,549

Balance as on March 31, 2016 1,042,059,860 33,728,933 554,262,515 303,605,008 1,933,656,316

Balance as on June 30, 2016 1,042,059,860 - 552,651,670 353,760,682 1,948,472,212



C) The statement of cash flows of the company was as under


30-Jun-16 31-Mar-16 31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11

Re-stated Re-stated

a) Cash flow from operating activities :

Received from Customers and Others 599,748,935 2,418,101,520 1,975,636,588 1,918,291,263 1,663,730,617 1,258,752,698

Payment to Creditors, Suppliers, Employees & Others (586,950,452) (2,353,639,971) (1,751,390,979) (1,406,253,335) (1,439,968,250) (1,337,740,348)

Income Tax Paid (4,226,203) (19,587,571) (12,686,934) (16,338,570) (13,939,876) (4,542,070)

Net cash provided by operating activities 8,572,280 44,873,978 211,558,675 495,699,357 209,822,490 (83,529,720)

b) Cash flow from investing activities

Acquisition of Property Plant and Equipment (24,149,832) (26,614,290) (118,205,459) (115,656,059) (23,800,325) (28,314,517)

Proceeds from Sales of Property Plant and Equipment 600,000 28,800,000 750,000 1,045,000 - -

Payment for Capital-Work-in-Progress (3,657,898) (14,396,325)

Advance Lease Deposits - (414,220)

Investment in Share Money Deposit of Taiwan Food &

Processing Industries Limited

- (62,000,000)

Investment/(Encashment) in FDR - 36,359,819 9,634,835 29,413,455 (23,914,344) (24,137,146)

Net cash used by investing activities (27,207,730) (38,265,016) (107,820,624) (85,197,604) (47,714,669) (52,451,663)

c) Cash flow from financing activities :

Share Money Deposit Received 40,144 43,816,847 - 1,668,581 16,531,500

Proceed from Issuance of Share 407,627,520 - - - -

Short Term Loan Received/(Paid)-Net 14,898,460 (473,106,401) 137,342,751 (253,662,798) (34,541,416) 211,321,633

Obligation under Finance Lease Received/(paid) (411,080) 6,208,198

Payment of Long Term Foreign Loan (38,505,032) (11,551,518)

Financial Expenses Paid (16,131,226) (131,609,554) (94,903,033) (133,872,679) (127,374,218) (86,133,559)

Current a/c with Related Entity 14,000,000 250,249,957 (161,170,012) (7,317,335) - 10,498,981

Net cash provided by financing activities 12,356,154 20,904,832 (74,913,447) (394,852,812) (160,247,053) 140,667,037

d) Net increase in cash (a+b+c) (6,279,296) 27,513,794 28,824,604 15,648,941 1,860,768 4,685,654

e) Cash at beginning at the period 47,332,408.00 19,082,645 27,421,566 11,772,625 9,911,857 5,226,203

f) Unrealized gain/(loss) (398,729.00) 735,969 - - - -

g) Cash at the end of the period ( d+e+f) 40,654,383 47,332,408 56,246,170 27,421,566 11,772,625 9,911,857



a) Internal and external sources of cash;

Particulars 01-Apr-16

to

30-Jun-16

01-Apr-15

to

31-Mar-16

01-Apr-2015 01-Jan-15

to

31-Mar-15

01-Jan-14

to

31-Dec-14

01-Jan-13

to

31-Dec-13

01-Jan-12

to

31-Dec-12

01-Jan-11

to

31-Dec-11

Internal Source of Cash Re-stated Re-stated

Share Capital 1,042,059,860 1,042,059,860 191,194,000 88,574,000 88,574,000 88,574,000 88,574,000 88,574,000

Share Money Deposit - 33,728,933 476,927,129 443,238,343 443,238,343 449,693,116 449,693,116 448,024,535

Retained earnings 353,760,682 303,605,008 157,668,849 32,355,290 18,733,423

(55,502,229)

(39,865,601)

(38,871,544)

Sub Total 1,395,820,542 1,379,393,801 825,789,978 564,167,633 550,545,766 482,764,887 498,401,515 497,726,991

External Sources of cash

Long Term Foreign Loan - 38,505,032 38,505,032 38,505,032 38,505,032 38,505,032 38,505,032

Obligation under Finance

Lease

5,797,118 6,208,198 - - - - - -

Loan from Shareholders 33,728,933 - - - - - - -

Short Term Bank loan 652,665,292 637,766,832 1,110,873,232 701,982,922 549,706,078 412,363,327 666,026,125 700,567,541

Sub Total 692,191,343 643,975,030 1,149,378,264 740,487,954 588,211,110 450,868,359 704,531,157 739,072,573

Grand Total 2,088,011,885 2,023,368,831 1,975,168,242 1,304,655,587 1,138,756,876 933,633,246 1,202,932,672 1,236,799,564

b) Any material commitments for capital expenditure and expected sources of funds for such expenditure;

SIL has no other material commitments for capital expenditures except for those mentioned in the Utilization of IPO proceeds in this prospectus.



C) Causes for any material changes from period to period in revenues, cost of goods sold, other operating expenses and net income;

The Company’s revenue and other income as well as operating expenses and net income have continued to change due to increasing business volume. Moreover, the

company has paid off significant amount of bank liability with the proceeds received from the raising of paid up capital and the company is saving huge amount of interest

which will eventually increase net profit of the company:


01-Apr-16

to

30-Jun-16

01-Apr-15

to

31-Mar-16

01-Jan-15

to

31-Mar-15

01-Jan-14

to

31-Dec-14

01-Jan-13

to

31-Dec-13

01-Jan-12

to

31-Dec-12

01-Jan-11

to

31-Dec-11

Re-stated Re-stated

Sales Revenue 756,861,925 2,636,557,896 390,141,810 1,780,751,795 1,878,484,554 1,883,339,590 1,179,310,883

Cost of Sales 669,410,501 2,331,681,538 346,930,751 1,576,699,811 1,667,224,358 1,732,311,277 1,067,359,827

Gross Profit 87,451,424 304,876,358 43,211,059 204,051,984 211,260,196 151,028,313 111,951,056

FC Gain/(Loss) -9,602,729 8,775,285 - - - - -





Add: Other Income 12,466,474 8,772,225 749,707 5,278,561 7,611,179 6,517,548 3,484,615








Causes for changes are as under:

Period Sales COGS Operating Expenses Net Profit

30-06-2016 Slight increase in sales of the company

were observed in 30 June 2016 than 30

June 2015.

Cost of goods sold of the company also

increased during this period due to

increase in sales.

Operating expenses of the company also

increased in consistent with sales and cost

of goods sold.

Net profit the company was

increased by reason of

increased gross profit and

decreased finance expenses.

31-03-2016 Sales of the company increased in 2016

due to amalgamation with Shepherd

Yarn Limited.

COGS also increased during this period

due to amalgamation.

Operating expenses also increased due to

amalgamation.

Net profit and gross profit of the

company increased due to

increased sales and reduced

operating expenses because of

this amalgamation with

Shepherd Yarn Limited. 31-03-2015 Sales of the company decreased by 20%

from 01April 2014 to 31 March 2015

due to political unrest in the country.

Cost of goods sold of the company had

also changed in line with sales.

The company’s administrative and selling

and distribution expenses were maintained

efficiently, and there were general changes

in operating expenses in this period.

Net profit of the company had

decreased due to decrease in

gross profit and increase in

operating expenses.

31-12-2014 Slightly decreased in sales of the

company were observed from 01

January 2014 to 31 December 2014 due

to political unrest in the country.

In this period raw material

consumption, overhead expenses and

cost of production was efficiently

managed and the cost of goods sold

decreased due to decreased in sales in

that period.





In spite of decrease of gross

profit by 3%, net profit had

increased by 118% due to

decreased finance cost by 30%.

31-12-2013 Sales of the company were almost

steady (decrease of .2%) from 01

January 2013 to 31 December 2013.

In this period raw material

consumption, overhead expenses and

cost of production was efficiently

managed and the cost of goods sold

decreased by 3%.





Net profit of the company had

highly increased due to increase

of gross profit and other

income.

31-12-2012 Sales of Shepherd Industries Limited

had increased from 01 January 2012 to

31 December 2012 due to introduce

some machinery in the production line

to cope up with the demand.

Costs of goods sold werechanged in line

with sales.

In operating expenses, administrative

expenses had decreased because of tied

internal control and selling and distribution

expenses had increased due to increase of

sales in this period.

In spite of increase of finance

expenses by 50%, net profit had

increased by 76% due to

increase of gross profit by 36%.



d) Any seasonal aspects of the issuer’s business;

The demand for company’s product goes high between February to September. The company dyes

yarn for the 100% export oriented sweater industries and generally demand goes high between the

said periods to the sweater industries for manufacturing of finished goods before winter.

e) Any known trends, events or uncertainties that may have material effect on the issuer’s future

business;

Though there are no known trends, events and/or uncertainties that shall have a material impact on

the company’s future business, the business operation of the Company may be affected by the

following events:

i) Political Unrest ii) Natural Disaster

iii) Increased Competition iv) Entrance of New Technology

v) Down Trend Demand in International Market

f) Any assets of the company used to pay off any liabilities;

The company sold 536.5 decimal lands which was not adjacent to the factory on 18/01/2016 at Tk.

2,76,40,000 to Shepherd Textile (BD) Ltd and proceeds received from the sales was used to pay off

short term bank of IFIC Bank amounting Tk. 18,652,981.



g) Any loan taken from or given to any related party or connected person of the issuer with details of the same;

The company gives loans to its related party which are under common management during last five years are as follows:

Relationship Nature of Transaction 30-Jun-16 31-Mar-16 31-Mar-15 01-Apr-15 31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11

Shepherd Textile (Bd) Ltd. Common Management Intercompany Loan 15,100,000 29,100,000 155,536,975 221,665,109 156,407,111 108,801,074 142,126,879 130,714,477

Shepherd Yarn Ltd. Common Management Intercompany Loan - - 173,058,897 - 176,412,296 126,461,362 85,788,138 97,085,507

Shepherd Electric Ltd. Previously Common

Management but at

present no

relationship

Intercompany Loan - - - - - 793,132 793,132 793,132

Shepherd Asia Zipper Ltd. - - - - - 13,991,477 13,991,477 13,991,477

Shepherd Apparels Washing Limited - - - - - 38,920 38,920 38,920

Taiwan Food & Processing Industries Ltd. Common Management Intercompany Loan - - 44,812,059 57,684,848 38,919,589 10,754,639 - -

Eternal Flame Int'l Co. Inc. Director Long Term Foreign Loan - - (38,505,032) (38,505,032) (38,505,032) (38,505,032) (38,505,032) (38,505,032)

Interest on Foreign Loan - (11,625,225) (19,252,542 (19,252,542) (19,252,542) (17,327,286) (15,402,030) (13,476,774)

Shareholders loan (4,351,405) - - - - - - -

Kao Wen Fu Managing Director Shareholders loan (10,554,794) - - - - - - -

Ever Priority Limited Director Shareholders loan (18,786,859) - - - - - - -

Chen Che Seng Sponsor Shareholders loan (6,597) - - - - - - -

Chung wen Kuei Chairman Shareholders loan (29,278) - - - - - - -

** Figures in bracket indicate Credit balances.


94

h) Any future contractual liabilities the issuer may enter into within next one year, and the impact, if

any, on the financial fundamentals of the issuer;

The company neither has any future contractual liabilities nor has any plan to enter into any

contractual liabilities other than normal course of business within next one year that would impact

the financial fundamentals of the company.

i) The estimated amount, where applicable, of future capital expenditure;

The Company has no plan to make any capital expenditure except for those mentioned in the ‘Use of

Proceeds’ section in this prospectus.

j) Any VAT, income tax, customs duty or other tax liability which is yet to be paid, including any

contingent liabilities stating why the same was not paid prior to the issuance of the prospectus.

Updated income tax status for the last 5 years or from commercial operation, which is shorter;

Value Added Tax (VAT):

The SIL has the VAT registration No. 18091004625, area code-180204. Since the company is 100%

export oriented company, as per Value Added Tax Act, 1991, Chapter-2, Section-3, Clause (2),the

applicable rate of VAT is zero. Therefore, no VAT liability is there.

Income Tax:

Shepherd Industries Limited having its TIN No. 815674589022 and regularly pays income taxes. The

company pays income tax at reduced rate which is 15% on income from export. Following is the

summary of income taxes of the company:

Accounting

Year

Assessmen

t Year Status Remarks

2011 2012-2013 Assessment

Completed

Total tax liability for the year after final assessment is tk.

4,309,482 including interest of tk. 231,913 out of which tk,

348,461 adjusted from tax deducted at source and tk.

179,755 paid through pay order. Due tax amount is Tk.

3,781,266.


Completed

Total tax liability for the year after final assessment is Tk.

9,416,698 against which Tk. 11,484,516 has been deducted at

source/paid in advance. Because of excess advance tax there

is no tax liability & the excess shall be adjusted/refunded by

the tax authority later.


Completed


11,450,388 against which Tk. 15,315,941 has been deducted

at source/paid in advance. Because of excess advance tax

there is no tax liability & the excess shall be

adjusted/refunded by the tax authority later.


Completed


1,54,84,502 out of which Tk. 126,86,934 has been paid as

advance tax and due tax amount is Tk.27,97,568.

2015-16 2016-2017 Return submitted assessment under process

Customs Duty:

SIL pays all customs duty as per the customs act of the country and there is no due in this regard

pending.

Contingent Liability:

There exists no situation involving SIL for which any liability for the company is most likely to occur or

which may create any possibility of company’s liability in the near future.

k) Any financial commitment, including lease commitment, the company had entered into during the

past five years or from commercial operation, which is shorter, giving details as to how the

liquidation was or is to be effected;

Financial and Lease commitments during last five years

a) Financial Commitment (Long Term)

SL # Company

Type of Loan

(Foreign

Loan)

Total Amount

(Sanctioned)

Rate of

Interest

(%)

Sanctio

n date

Half yearly

Installment

Outstanding

Balance as

of 30 June

2016

01 Eternal Flame Int’l Co.

Inc (Taiwanese ) Related party $ 2,000,000.00 5% 2004 $ 41,695.63 -

b) Financial Commitment (Short Term)

SL

# Company Type of Loan

Total Amount

as on 30-06-

2016

Rate of

Interest

(%)

Outstanding

Balance as of

30 June 2016

01 Loan received from

Shareholders Related party 33,728,933 - 33,728,933

c) Lease commitment

Shepherd Industries Ltd entered into the following lease commitment during the last five years. The status

and outstanding as on 30 June 2016 are presented below:

SL

# Bank Type of loan

Limit of loan

(million)

Rate of

Interest

(%)

Outstanding

Balance as of

30 June 2016

01 IFIC Bank Limited Demand Loan 250 12 143,171,891

02 IFIC Bank Limited LDBP Loan 600 12 124,423,101

03 IFIC Bank Limited SOD - IFIC Bank 50 12 48,661,724

04 Trust Bank Limited LDBP Loan 300 14.5 169,370,800

05 Southeast Bank Limited LDBP Loan 500 13 119,338,454

06 Southeast Bank Limited SOD-Southeast Bank 30 13 30,929,053

07 Southeast Bank Limited Loan Against Trust Receipts 100 13 16,770,269

Total 652,665,292

SL. NBFI Type of

Loan

Total Amount

(Sanctioned)

Rate of

Interest

(%)

Sanction

date

Monthly

Installment

Outstanding

Balance as of

30 June 2016

1 IDLC Finance

Ltd Car 7,600,000 13.85 23/03/2015 207,110 5,797,118

l) Details of all personnel related schemes for which the company has to make provision for in future

years;

The company considers its human resources as the most valuable assets and the profitability of the

company largely depends on the effective and efficient productivity of human resources. The

company provides various benefit packages to its employees in addition to monthly benefit of salary,

wages and allowances. Lists of provided benefits are as under:

Festival Bonus : The Company Pays two festival bonuses @ 68% of gross

salaries.

Yearly Increment/Promotions : Employees are awarded with a minimum increment of at least

10% of salary and promotion for extra ordinary performances.

Group Insurance : The company has established group insurance policy with

Metlife Alico for its permanent employees.

Provident Fund : The company has been maintaining a recognized contributory

provident fund for all of its permanent executives. The fund is

administrated by a board of trustee and is funded by 10%

contributions from the salaries equally by the employees and

the company.

Gratuity : The company Introduced gratuity scheme for the confirmed

employees of the company during the year 2015.

Medical Treatment Facility : Employees of Shepherd Industries Limited receive medical

treatment facility for any kind of injury during the course of

their service in the company.

Childcare : Women workers are entitled for child care facilities in the

factory premises while they are at work.

Leave encashment : Employees are entitled to enjoy encashment against leave if

not enjoyed.

m) Break down of all expenses related to the public issue;

Sl. Particulars Basis Amount in BDT (approx.)

A. MANAGERS TO THE ISSUE FEES 2,300,000

1 Managers to the Issue fee 1% of public offering, Maximum 3,000,000

(Thirty Lac) 2,000,000

2 VAT against Issue Management Fees 15% of issue management fees 300,000

B. FEES RELATED TO LISTING WITH THE STOCK EXCHANGES 5,123,004

3 Prospectus Submission Fees to DSE & CSE Tk. 50,000 for each stock exchanges

100,000.00

4 DSE and CSE Annual Fee 0.05% Up to Tk. 100 crore and 0.02% up

above Tk. 100 cr. paid up capital 1,096,824

5 Fees related to Listing with the stock

exchanges

@ 0.25% on Tk. 10 Crore and 0.15% on

the rest amount of paid up capital range;

(minimum 50 thousand maximum Tk. 1

Crore for each exchanges)

3,926,180

C. BSEC FEES 850,000

6 Application fee Fixed 50,000

7 Consent fee fee @ 0.40% on entire offer 800,000

D. IPO RELATED FEES 900,000

8 Underwriting commission (1%) Commission @ 1% on Underwritten

Amount 700,000

9 Auditors Certification fees Estimated (to be paid at actual) 200,000

E. CDBL FEES AND EXPENSES 794,809

10 Security Deposit At Actual 500,000

11 Documentation fee At Actual 2,500

12 Annual fee At Actual 100,000

13 Connection Fee (TK. 500 per month* 12) At Actual 6,000

14 Initial Public Offering fee 0.015% of the Issue size and 0.015% of

Pre IPO paid up capital 186,309

F. PRINTING AND POST PUBLIC OFFER EXPENSES 5,032,187

15 Publication of prospectus Estimated (to be paid at actual) 600,000

16 Abridge Version of Prospectus and Notice in

4 daily news paper Estimated (to be paid at actual) 500,000

17 Notice for prospectus, Lottery, Refund etc .in

4 daily news paper Estimated (to be paid at actual) 300,000

18 Lottery related expenses including BUET fee Estimated (to be paid at actual) 850,000

19 Data Processing and Share Software Charge Estimated (to be paid at actual) 2,400,000

20 Courier expenses Estimated (to be paid at actual) 150,000

21 Administrative & Stationary Expense Estimated (to be paid at actual) 232,187

Grand Total 15,000,000

N:B: Actual costs will differ if above mentioned estimates differ and will be adjusted accordingly

n) If the issuer has revalued any of its assets, the name, qualification and experiences of the valuer

and the reason for the revaluation, showing the value of the assets prior to the revaluation

separately for each asset revalued in a manner which shall facilitate comparison between the

historical value and the amount after revaluation and giving a summary of the valuation report

along with basis of pricing and certificates required under the revaluation guideline of the

Commission;

Shepherd Industries Limited has revalued its fixed assets in the financial year 2010 and 2011, which

has been reflected in the financial statements of the company. Shepherd Yarn Limited has also

revalued land and building in 2011 and in 2014.

Dates of revaluation performed in different times are follows:

Sl.

No

Date Performed by Valuer

1 29-03-2011 Shepherd Industries Limited Mridha & Associates

(Consulting Engineers Architects Planners

Builders Surveyors Real Estate Developers

Graphic & Interior Decoration Designers

Projected Profile & Valuation Engineers)

Sugandha Super Market (-2nd

Floor), Savar

Bazar Bus Stand, Savar Dhaka.

Phone: +88-02-774812

Mobile: 01715-013253, 01682-121672

email: [email protected]

2 12-03-2012 Shepherd Industries Limited

3 30-03-2011 Shepherd Yarn Limited

4 30-04-2014 Shepherd Yarn Limited

Experience of the Valuer:

Mridha and Associates performed following nos valuation during the year 2015:

Particulars No.

a) Valuation of Land & Building : 350- Nos.

b) Valuation of Machinery & Equipment : 100- Nos.

c) Valuation of stock / Inventory : 50- Nos.

Purpose of Valuation: To reflect the fair value of lands and buildings. Mentionable here, that due to

amalgamation we have disclosed the information of Shepherd Yarn Limited.

Basis of Revaluation:

The Valuer has estimated the value of the assets of the company on the basis of current market price by taking

into consideration of the location and recent transfer of the land in the same vicinity depending on the nature

of assets and rationale applicable.

All the revaluation of the company’s asset made in different times by Mridha & Associates (Consulting

Engineers Architects Planners Builders Surveyors Real Estate Developers Graphic & Interior Decoration

Designers Projected Profile & Valuation Engineers), the independent valuer not related with the company. The

company made revaluation of land and land development, Factory and office Buildings in different times to

reflect fair value thereof, details of which are as follows:

1st

Revaluation (Shepherd Industries Limited)

Particulars of

the assets

Name of

the

Valuer

Qualification of

the Valuer

Date of

Revaluation

Carrying

amount of

Assets

Value of Assets

after

revaluation

Revaluation

Surplus

Land: 792.75

Decimal Mridha &

Associates

Consulting

Engineers

Architects Planner

29/03/2011

20,189,297 248,369,000 228,179,703

Factory Building

and Other

construction

39,495,352 135,845,912 96,350,560

Total 59,684,649 384,214,912 324,530,263

Auditors’ certificate on compliance of BSEC notification dated August 18, 2013 regarding revaluation of assets

This is to certify that Shepherd Industries Limited revalued its assets on 29 March 2011 which was done by

Mridha & Associates. In our opinion, the company has recognized its assets revaluation in its financial

statements as per decision of Board of Directors of the Company and as per requirements of BAS 16.

We also certify that the recognition of revaluation was done before the issuance of BSEC notification

SEC/CMRRCD/2009-193/150/Admin/51 dated 18 August 2013 complying all except the conditions # A4, A6,

B1,B12 in the revaluation guideline.

Dhaka


Sd/-

Mahfel Huq & Co


2nd

Revaluation (Shepherd Industries Limited)

Particulars of

the assets

Name of

the Valuer

Qualification of the

Valuer

Date of

Revaluation

Carrying

amount of

Assets

Value of Assets

after

revaluation

Revaluation

Surplus

Land:

1224.75

decimal

Mridha &

Associates

Consulting

Engineers

Architects Planner

12-03-2012

70,193,330

384,773,033 314,579,703

Total 60,120,297 384,773,033 314,579,703


This is to certify that Shepherd Industries Limited revalued its assets on 12 March 2012 which was done by

Mridha & Associates. In our opinion, the company has recognized its assets revaluation in its financial

statements as per decision of Board of Directors of the Company and as per requirements of BAS 16.



A8, B1 in the revaluation guideline.

Dhaka


Sd/-

Mahfel Huq & Co


1st

Revaluation (Shepherd Yarn Limited)

Particulars of

the assets

Name of the

Valuer

Qualification of

the Valuer

Date of

Revaluation

Carrying

amount of

Assets

Value of Assets

after

revaluation

Revaluation

Surplus

Land: 410

decimal

Mridha &

Associates

Consulting

Engineers

Architects

Planner

30/03/2011

15,158,034 150,200,000 135,041,966 Land:119.25

decimal

Building and

Others 33,907,430 96,381,700 62,474,270

Total 49,065,464 246,581,700 197,516,236


This is to certify according to revaluation report of Shepherd Yarn Limited, report dated 30-March-2011 which

was done by Mridha & Associates. In our opinion, the company has recognized its assets revaluation in its

financial statements as per decision of Board of Directors of the Company and as per requirements of BAS 16.



B1, B12 in the revaluation guideline.

Dhaka


Sd/- Mahfel Huq & Co


2nd

Revaluation (Shepherd Yarn Limited)

Particulars of

the assets

Name of

the Valuer

Qualification of

the Valuer

Date of

Revaluation

Carrying

amount of

Assets

Value of Assets

after

revaluation

Revaluation

Surplus

Land: 11.81

decimal Mridha &

Associates

Consulting

Engineers

Architects Planner

30-04-2014

34,394,355 132,378,600 97,984,245

Existing Six

Storied Office

Building

5,7897,180 5,7897,180 -

Total 92,291,535 190,275,780 97,984,245


This is to certify that Shepherd Yarn Limited revalued its assets on 30 April, 2014 which was done by Mridha &

Associates. In our opinion, the company has recognized its assets revaluation in its financial statements as per

decision of Board of Directors of the Company and as per requirements of BAS 16.

We also certify that the recognition of revaluation was done after the issuance of BSEC notification

SEC/CMRRCD/2009-193/150/Admin/51 dated 18 August 2013 complying all except the conditions # A4 in the

revaluation guideline.

Dhaka


Sd/-

Mahfel Huq & Co


o) Where the issuer is a holding/subsidiary company, full disclosure about the transactions, including

its nature and amount, between the issuer and its subsidiary/holding company, including transactions which

had taken place within the last five years of the issuance of the prospectus or since the date of incorporation

of the issuer, whichever is later, clearly indicating whether the issuer is a debtor or a creditor;

The Company neither has any subsidiary nor itisoperated under a holding company.


101

p) Financial Information of Group Companies: following information for the last three years based on the audited financial statements, in respect of all the group

companies of the issuer, wherever applicable, along with significant notes of auditors:

Shepherd Industries Ltd. has no associate or subsidiary company. Financial performances of the company under common management are as under:

Sl Particulars Shepherd Textile (BD) Limited Taiwan Food & Processing Industries Limited Shepherd Yarn Limited

2014-15 2013-14 2012-13 2014-15 2013-14 2012-13 2014-15 2013-14 2012-13

1 Date of

Incorporation

16/11/1997 22/07/2013 06/04/2005

2 Nature of Business

Knit Fabrics Manufacturer Different Types of Food Processing and export. Dyeing of different counts of Yarn to export oriented

garments industry as deemed exporter

4 Equity Capital (paid

up capital) 46,058,800 46,058,800 42,058,800 500,000 500,000 - 102,620,000 102,620,000 102,620,000

3 Reserves (Retained

Earnings) 73,317,413 42,689,169 5,489,254 (27,350,633) - - 125,313,558 88,532,009 49,484,215

5 Sales 1,227,254,643 1,061,636,058 636,890,859 8,104,015 - - 750,609,459 769,505,430 701,850,740

6 Profit after tax 30,628,244 37,199,914 17,967,068 (27,350,633) - - 32,227,175 36,082,590 64,649

7

EPS Tk. 100 per

share 66.50 80.77 42.72 (5,470.13) - - 31.40 29.91 0.063

EPS (Diluted) 66.50 80.77 42.72 (5,470.13) - - 31.40 29.91 0.063

8 Net Asset Value

(NAV) Tk. 558 492 440 16058.47 7217.13 - 481.91 455.69 379.37

9 Status of Listing non-listed non-listed non-listed

10

Information

regarding

significant adverse

factors

No Significant Adverse factors Operating Loss No Significant Adverse factors The company is

amalgamated with Shepherd Industries Limited

11

has become sick or

is under winding

up;

N0 No No

September 23, 2016

Information regarding significant adverse factors

This is to certify that, the company has no significant adverse factors relating to the financial information of the group.

Sd/-

Kao Wen Fu


Sd/-

Chung Wen Kuei

Chairman & Director

Sd/-

Lin Chih-Wen


Sd/-



Sd/-

Yang Ming Te



102

12. The related business transactions within the group and their significance on the financial performance of

the issuer:

There are no business transactions which will impact financial performances of the company except the

rental income received from the related party.

13. Sales or purchase between group companies/ subsidiaries/ associate companies when such sales or

purchases exceed in value in the aggregate ten per cent of the total sales or purchases of the issuer and also

material items of income or expenditure arising out of such transactions:

There were no transactions of Shepherd Industries limited between group companies/ subsidiaries/

associate companies which exceeded in value in the aggregate 10% of the total sales or purchases of the

company.

14. Where the issuer is a banking company, insurance company, non-banking financial institution or any

other company which is regulated and licensed by another primary regulator, a declaration by the board of

directors shall be included in the prospectus stating that all requirements of the relevant laws and

regulatory requirements of its primary regulator have been adhered to by the issuer;

Not Applicable


103

15. A report from the auditors regarding any allotment of shares to any person for any consideration

otherwise than cash along with relationship of that person with the issuer and rationale of issue price of

the shares;

Auditor’s Certificate regarding allotment of shares to Sponsor/Director/Shareholders for consideration in

cash/other than cash

After verification, we certify the paid up capital of Shepherd Industries Limited as at 30June, 2016 was BDT

1,042,059,860 divided into 104,205,986 ordinary shares of taka 10/- each made up as follows:

Particulars Date

Consideration No of Ordinary

Shares Amount Tk.

Cash Other than cash

MOA and AOA 01/08/2000 60,600 - 60,600 606,000

1st Allotment 01/07/2002 7,939,400 - 7,939,400 79,394,000

2nd Allotment 12/11/2011 857,400 - 857,400 8,574,000

3rd Allotment (Through

Amalgamation with


01/04/2015 - 10,262,000 10,262,000 102,620,000

4th Allotment 14/02/2016 85,086,586 - 85,086,586 850,865,860

Total 104,205,986 1,042,059,860

As a natural follow up, Board of Directors both the companies decided to amalgamate the Shepherd Yarn

Limited with Shepherd Industries Limited. As such applied for same to Honorable High Court Division of

Bangladesh Supreme Court and eventually obtain verdict in favor of amalgamation dated 15-12-2014. After

that, as part of completion of amalgamation procedure the company issued 1,026,200 ordinary shares @ Tk.

100/- each as purchase consideration.

The company, however has sub divided the face value of its ordinary shares from taka 100/- to taka 10/- by

passing special resolution in its extra ordinary general meeting held on 08-06-2015 and necessary amendments

in the capital clause of Memorandum and Articles of Association were made accordingly. Hence, the paid up

capital of the company comes to taka 191,194,000divided into 19,119,400 ordinary shares of taka 10.00 each.

Again the company applied and obtains approval from Bangladesh Securities and Exchange Commission (BSEC)

vides its Letter No. BSEC/CI/CPLC-519/2015/582 dated: 24/11/2015 for issuance of 85,086,586 Ordinary shares

of Tk. 10.00 each against existing and other than existing shareholders of the company.

Dated: Dhaka

September 23, 2016

Sd/-

Mahfel Huq & Co.


16. Any material information, which is likely to have an impact on the offering or change the terms and

conditions under which the offer has been made to the public;

There is no such material information which is likely to have an impact on the offering or change the terms and

conditions under which the offer has been made to the public

17. Business strategies and future plans. Projected statement of financial position, comprehensive

statement of income and earnings per share for the next three accounting years as per the issuers own

assessment.

The company has no subsidiary or associate company. Hence, this section is not applicable for us.


104

q) Discussion on the results of operations shall inter-alia contain the following:

1) A summary of the past financial results after adjustments as given in the auditor’s report containing significant items of income and expenditure;

There was no significant adjustment given by the last five years audited adjustment except amalgamation with Shepherd Yarn Limited.

Summary of the results and operations are presented below:

Particulars

01-Apr-16

to

30-Jun-16

01-Apr-15

to

31-Mar-16

(Re-stated)

01-Apr-2015 01-Jan-15

to

31-Mar-15

01-Jan-14

to

31-Dec-14

01-Jan-13

to

31-Dec-13

(Re-stated)

01-Jan-12

to

31-Dec-12

01-Jan-11

to

31-Dec-11

Non-Current Assets 1,384,811,864 1,346,179,361 1,354,364,604 830,378,882 834,781,166 754,374,214 680,731,786 689,605,972

Current Asset 2,471,463,873 2,531,856,325 2,323,753,225 1,561,776,222 1,743,761,085 1,776,228,751 1,813,552,102 1,355,445,135

Shareholders' Equity 1,948,472,212 1,933,656,316 1,434,918,136 940,382,549 928,341,072 867,584,149 909,331,778 908,657,254

Non-Current Liability 123,185,570 124,017,703 169,670,497 119,657,390 120,158,889 121,356,909 38,505,032 38,505,032

Current Liabilities 1,784,617,955 1,820,361,667 2,073,529,196 1,332,115,164 1,530,042,290 1,541,661,907 1,546,447,078 1,097,888,822

Turnover 756,861,925 2,636,557,896 - 390,141,810 1,780,751,795 1,878,484,554 1,883,339,590 1,179,310,883

Gross Profit 87,451,424 304,876,358 - 43,211,059 204,051,984 211,260,196 151,028,313 111,951,056

Net profit before tax 59,901,062 147,198,194 - 14,342,845 91,775,618 54,192,576 2,102,356 1,198,369

Net Profit after tax 48,199,648 131,340,828 - 12,041,477 76,313,041 34,969,372 1,787,003 1,018,614

*Due to amalgamation no information of turnover and profit is available on the date April 01, 2015.

2) A summary of major items of income and expenditure;

Major items of income:

Particulars

01-Apr-16

to

30-Jun-16

01-Apr-15

to

31-Mar-16

01-Jan-15

to

31-Mar-15

01-Jan-14

to

31-Dec-14

01-Jan-13

to

31-Dec-13

01-Jan-12

to

31-Dec-12

01-Jan-11

to

31-Dec-11

Re-stated Re-stated

Turnover 756,861,925 2,636,557,896 390,141,810 1,780,751,795 1,878,484,554 1,883,339,590 1,179,310,883

Gross Profit 87,451,424 304,876,358 43,211,059 204,051,984 211,260,196 151,028,313 111,951,056


Net Profit after tax 48,244,273 131,340,828 12,041,477 76,313,041 34,969,372 1,787,003 1,018,614

Major items of expenditure:

Particulars 01-Apr-16

to

30-Jun-16

01-Apr-15

to

31-Mar-16

(Re-stated)

01-Apr-2015 01-Jan-15

to

31-Mar-15

01-Jan-14

to

31-Dec-14

01-Jan-13

to

31-Dec-13

(Re-stated)

01-Jan-12

to

31-Dec-12

01-Jan-11

to

31-Dec-11

Cost of Sales 669,410,501 2,331,681,538 - 346,930,751 1,576,699,811 1,667,224,358 1,732,311,277 1,067,359,827

Selling distribution expenses 1,977,383 8,708,972 - 299,008 1,418,384 2,238,826 1,550,063 1,282,396

Administrative Expense 12,305,498 42,533,765 - 7,367,962 21,233,510 26,642,038 24,593,968 26,821,347

Financial Expenses 16,131,226 123,982,237 - 21,950,951 94,903,033 135,797,935 129,299,474 86,133,559

Income Tax Expense 11,701,414 15,858,066 - 2,301,368 15,462,577 19,223,204 315,353 179,755


105

3) The income and sales on account of major products or services;

Since, the company is engaged in the business of yarn dyeing. Hence, dyed yarn is the only

product which contributes 100% on the total revenue.

4) In case, other income constitutes more than 10% of the total income, the breakup of the same

along with the nature of the income, i.e., recurring or non-recurring;

The Company’s other income is not more than 10% of the total income.

5) If a material part of the income is dependent upon a single customer or a few major

customers, disclosure of this fact along with relevant data. Similarly, if any foreign customer

constitutes a significant portion of the issuer’s business, disclosure of the fact along with its

impact on the business considering exchange rate fluctuations;

The Company’s material part of the income is not dependent upon a single customer or a few

major customers. The company has huge customer base and sells its products to 100% export

oriented industries. Due to huge volume of buyer we did not include the list of buyers in the

prospectus but lists of buyers/receivables can be found at Annexure-C of the audited Financial

Statements incorporated in this prospectus.

6) In case the issuer has followed any unorthodox procedure for recording sales and revenues, its

impact shall be analyzed and disclosed.

The issuer has not followed any unorthodox procedure for recording sales and revenues.


106

r) Comparison of recent financial year with the previous financial years on the major heads of the profit and loss statement, including an analysis of reasons for

the changes in significant items of income and expenditure, inter-alia, containing the following:

Revenue And Results From Operation

Particulars Amount in Taka 01-Apr-16

to

30-Jun-16

01-Apr-15

to

31-Mar-16

01-Jan-15

to

31-Mar-15

01-Jan-14

to

31-Dec-14

01-Jan-13

to

31-Dec-13

01-Jan-12

to

31-Dec-12

01-Jan-11

to

31-Dec-11

Three Months Re-stated Re-stated

Sales Revenue 756,861,925 2,636,557,896 390,141,810 1,780,751,795 1,878,484,554 1,883,339,590 1,179,310,883

Cost of Sales 669,410,501 2,331,681,538 346,930,751 1,576,699,811 1,667,224,358 1,732,311,277 1,067,359,827

Gross Profit 87,451,424 304,876,358 43,211,059 204,051,984 211,260,196 151,028,313 111,951,056

FC Gain/(Loss) (9,602,729) 8,775,285 - - - - -




- - -

Operating Profit for the Year 63,565,814 262,408,906 35,544,089 181,400,090 182,379,332 124,884,281 83,847,313

Add: Other Income 12,466,474 8,772,225 749,707 5,278,561 7,611,179 6,517,548 3,484,615







107

1) Unusual or infrequent events or transactions including unusual trends on account of business

activity, unusual items of income, change of accounting policies and discretionary reduction of

expenses etc.

There are no unusual of infrequent events or transaction including unusual trend in account of

business activity, unusual items of income or discretionary reduction of expenses except

amalgamation and changes in accounting policies as under.

Changes in

accounting policy

FY

: Changes

March 31, 2016 : Introduction of BAS-19: Employee benefit for employees provident

fund and Gratuity

April 01, 2015 : Introduction of BFRS-3 for adoption of necessary changes for

amalgamation

2014 : Introduction of BAS-12: Income Taxes

2013 : Nil

2) Significant economic changes that materially affect or are likely to affect income from

continuing operations;

The company recently raised its paid up capital and paid off significant amount of bank loan

and thus debt to equity ratio has been significantly decreased which will eventually boost up

the profitability of the company by reducing the financial expenses.

3) Known trends or uncertainties that have had or are expected to have a material adverse

impact on sales, revenue or income from continuing operations;

Though there are no known trends, events and/or uncertainties that shall have a material

impact on the company’s future business, the business operation of the Company may be

affected by the following events:

i. Decrease in the demand of readymade garments products in the local and

International Market,

ii. Increased production cost

iii. Decrease in product selling price

iv. Increased Competition

v. Scarcity of GAS, Electricity and raw materials

vi. Govt. Policy Changes towards the industry,

vii. Political unrest

viii. Natural disaster

4) Future changes in relationship between costs and revenues, in case of events such as

future increase in labor or material costs or prices that will cause a material change are

known;

We are aware of the fact that future is always uncertain that might affect business and

plan as well. Thus, in future labor cost or material price may change which may affect the

company’s business. However, revenue is always adjusted and follows the trend in line

with production cost. Hence, any change in cost will be reflected in sales price. We have

strong influence over market to set the trend as well.

5) The extent to which material increases in net sales or revenue are due to increased

sales volume, introduction of new products or services or increased sales prices;

We are expecting increased net sales or revenue because of sales volume, new product

line added to the company. It is forecasted that we will be able to increase our net sales

or revenue around 27 percent on an average for the next 3 years.

6) Total turnover of each major industry segment in which the issuer operated;

Year Export of RMG

(in Million US$)

Total Export

(In million US$)

% of RMG’s to total

Export

2009-10 12,496 16,204 77.12%

2010-11 17,914 22,924 78.15%

2011-12 19,089 24,287 78.60%

2012-13 21,515 27,018 79.63%

2013-14 24,491 30,186 81.13%

2014-15 25,491 31,208 81.68%

2015-16 (July-Feb) 18,128 22,123 81.94%

Source: EPB (Export Promotion Bureau).Since, there is no direct data of dying industry we

could not provide any data related to the dying industry.

7) Status of any publicly announced new products or business segment;

The company is in the process of establishing washing plant for 100% export oriented

garments/sweater industries for which the company already started importing

machineries through 360 days deferred L/C; payment of which will be made through the

fund received from IPO proceeds.

8) The extent to which the business is seasonal.

Generally demand for company’s product goes high between February to September.

s) Defaults or rescheduling of borrowings with financial institutions/banks, conversion of loans

into equity along with reasons thereof, lock out, strikes and reasons for the same etc.

The Company neither has defaulted nor rescheduled of borrowings with financial

institutions/banks nor has converted any of its loan into equity since inception.

t) Details regarding the changes in the activities of the issuer during the last five years which

may had a material effect on the profits/loss, including discontinuance of lines of business,

loss of agencies or markets and similar factors;

There were no changes in the activities of the Company during the last five years and had not

any material effect on the profits/loss, including discontinuance of lines of business, loss of

agencies or markets and similar factors.

u) Injunction or restraining order, if any, with possible implications;

The company never faces any injunction or restraining order from any court of law or from any

competent authority.

v)Technology, market, managerial competence and capacity built-up;

Technology

Shepherd Industries Limited has been using State of the Art machineries and technologies in

order to dye of (acrylic, wool, cotton, viscos etc.) yarn. Its manufacturing process is heavily

technology driven, dynamic in nature with cutting edge technology imported from different

countries. Shepherd Industries Limited has modern research and development facilities, up-to-

date water generation and fire management system and echo friendly biological effluent

treatment plant. Total quality management is lead by the trained professionals, strict

monitoring and true measurement always provided competitive advantage.

Market

Bangladesh is one of the largest producers of textiles and garments products. Abundant

availability of raw materials and cheap labour has made the country a sourcing hub. With the

improvement of the Textile & RMG sector in Bangladesh a lot of backward linkage industries

have been established to support the Textile & RMG. Dyeing industry is one of the most

important backward linkage industries for the Textile & RMG, the demand of which is

increasing day by day considering the development of the Textile & RMG.

Shepherd Industries Limited has good market position with nearly 16 years of experience in dying

industries. SIL dyes different types of yarn includes various types of cotton, Acrylic, Acrylic Wool,

Nylon and Viscose blended yarn etc.

Managerial competence

All the members of the management team of the company are highly qualified, trained & skilled

professionals, well experienced and extremely devoted. The management team is lead by Mr. Kao

Wen Fu, Managing Director who acts for the best interest of the company.

The expert team of Shepherd industries Limited, consists of a good number of professionals from

various disciplines, is seasoned and experienced enough to use the facilities for production to fulfill

the demand of the target of customers. Successive and sustainable strong financial performance is

the result of unwavering commitment of the promoters, management efficiency, employees’

sincerity, use of appropriate technology.

Capacity builds up

To keep space with the contemporary technology and customer demand the company continuously

investing and deploying enough resources including human resources. To cope up with the growing

market demand and strengthening long term sustainability.

w) Changes in accounting policies in the last three years;

Changes in

accounting policy

FY

: Changes

March 31, 2016 : Introduction of BAS-19: Employee benefit for employees; provident

fund and Gratuity

April 01, 2015 : Introduction of BFRS-3 for adoption of necessary changes for

amalgamation

2014 : Introduction of BAS-12: Income Taxes

x) Significant developments subsequent to the last financial year: A statement by the directors whether

in their opinion there have arisen any circumstances since the date of the last financial statements as

disclosed in the prospectus and which materially and adversely affect or is likely to affect the trading

or profitability of the issuer, or the value of its assets, or its ability to pay its liabilities within the next

twelve months;

September 23, 2016

Statement regarding significant developments subsequent to the last financial year

This is to certify that In our opinion, there have not arisen any circumstances since the date of the last financial

statements as disclosed in the prospectus which materially and adversely affect or is likely to affect the trading

or profitability of the Shepherd Industries Limited or the value of its assets, or its ability to pay its liabilities

within the next twelve months.

Sd/-

Kao Wen Fu


Sd/-

Chung Wen Kuei

Chairman & Director

Sd/-

Yang Ming Te


Sd/-

Lin Chih-Wen


Sd/-



y) If any quarter of the financial year of the issuer ends after the period ended in the audited financial

statements as disclosed in the prospectus, unaudited financial statements for each of the said quarters

duly authenticated by the CEO and CFO of the issuer;

Duly authenticated audited financial statements for the period ended June 30, 2016 have been

incorporated in the draft prospectus. Unaudited financial statements for the period ended September 30,

2016 is incorporated in the prospectus.

UNAUDITED

SHEPHERD INDUSTRIES LIMITED Statement of Financial Position

as on September 30, 2016

Amount in Taka Amount in Taka

30.09.2016 30.06.2016

ASSETS AND PROPERTIES

Non-Current Assets 1,376,487,921 1,384,811,864

Property, Plant & Equipment 1,325,920,187 1,334,235,677

Capital Work-in-Progress 50,407,119 50,407,119

Intangible Asset 160,615 169,068

Current Assets 2,187,580,661 2,471,463,873

Inventories 1,229,345,758 1,184,165,958

Trade & other Receivables 845,100,268 1,091,466,500

Investment - 62,232,899

Advance, Deposits & Prepayments 85,102,071 77,844,133

Current a/c with Related Entity 13,100,000 15,100,000

Cash and Cash Equivalents 14,932,564 40,654,383

3,564,068,582 3,856,275,737

EQUITY AND LIABILITIES

Shareholders' Equity 1,970,701,465 1,948,472,212

Share Capital 1,042,059,860 1,042,059,860

Revaluation Reserve 551,080,762 552,651,670

Retained Earnings 377,560,843 353,760,682

Non-Current Liabilities 122,219,879 123,185,570

Obligation under Finance Lease 3,515,388 4,003,683

Deferred Tax liabilities 118,704,491 119,181,887

Current Liabilities 1,471,147,238 1,784,617,955

Loan from Shareholders' 33,728,933 33,728,933

Trade & other Payables 716,419,216 968,869,108

Obligation under Finance Lease-Current Portion 1,856,252 1,793,435

Short Term Bank Loan 567,498,386 652,665,292

Liabilities for Expenses & Provisions 151,644,451 127,561,187

3,564,068,582 3,856,275,737

Net Asset Value Per Share (With Revaluation Reserve) 18.91 18.70

Net Asset Value Per Share (Without Revaluation Reserve) 13.62 13.39

Sd/- Sd/- Sd/- Sd/- Sd/-

Chief Financial Officer Company Secretary Director Managing Director Chairman

UNAUDITED

SHEPHERD INDUSTRIES LIMITED Statement of Profit or Loss and Other Comprehensive Income for the period from July 01 to September 30, 2016


30.09.2016 30.09.2015

Revenue 560,275,381 556,484,437

Less: Cost of Sales (495,913,808) (493,370,227)

Gross Profit 64,361,573 63,114,210

11.49% 11.34%

Foreign Currency Gain/(Loss) (4,674,105) 604,499

Add: Other income 1,744,889 2,331,625

Less: Operating Expenses (14,285,057) (13,952,421)

Selling & Distribution Expenses (2,479,066) (2,305,139)

Administrative Expenses (11,805,991) (11,647,282)

Profit before Financial Expenses & Tax 47,147,300 52,097,913

Less: Financial Expenses (20,672,025) (32,206,910)

Net Profit/ (Loss) before tax 26,475,275 19,891,003

Income Tax Expense: (4,582,646) (3,852,007)

Current Tax (4,723,418) (3,963,271)

Deferred Tax Income/(Expenses) 140,772 111,264

Net Profit/ (Loss) after Tax for the period 21,892,629 16,038,996

Basic Earning Per share (Par Value of Tk. 10/- each) 0.21 0.84

Re-stated Earning Per share (Par Value of Tk. 10/- each) 0.21 0.25



z) Factors that may affect the results of operations.

Though there are no known trends, events and/or uncertainties that shall have a material impact on the

company’s future business, the business operation of the Company may be affected by the following

events:

i. Decrease in demand of readymade garments products in the local and International Market,

ii. Increased production cost

iii. Decrease in per unit sales price

iv. Increased Competition

v. Scarcity of GAS, Electricity and raw materials

vi. Govt. Policy Changes towards the industry,

vii. Political unrest

viii. Natural disaster

SECTION (VII): MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULT OF OPERATIONS

a)a)a)a) Overview of business and strategies:

Shepherd Industries Limited (SIL), one of the leading export oriented yarn dyeing factory in Bangladesh.

SIL was incorporated on 21 August 2000 vide registration no. C-41066(425)/2000 as private limited

company. The Company started its commercial operation in October 18, 2001. SIL has been converted in

to a public limited company on 8th

June, 2015 with RJSC under the Companies Act, 1994. The main

activities of the Company are concentrated in Dyeing of different types and count of yarn for 100% Export

oriented Sweater industries. SIL sells its products through L/C to the 100% export oriented sweater

manufacturers who consume the dyed yarn as raw materials of their products. Therefore, the final

destination of the company’s products is overseas market. The company amalgamated with Shepherd

Yarn Limited, under the scheme of amalgamation by the order of the Hon’able High Court Division of

Supreme Court Bangladesh dated December 15, 2014 with effect from April 01, 2015.

Business Strategy: � The Company established State-of-the-art manufacturing facilities for ensuring best quality

products to its customers.

� Expansion of existing and development of new large scale projects for a diversified product range

to stimulate the growth.

� Expansion of ETP, establishment of washing plant & BMRE of the existing Unit to cope up with

the market demand.

� Continuously seeking new ways of working to improve efficiency and ensure sustainability.

b) SWOT ANALYSIS:

Company Background

Name: Shepherd Industries Limited

Industries served: Textile & RMG Sector

Factory: Bagrapara, Kathalia, Bhaluka, Mymensingh, Bangladesh

Corporate Office: House#24, Road#04, Sector#04, Uttara, Dhaka-1230

Current Managing Director: Mr. Kao Wen Fu

Revenue: Tk. 756,861,925( 01-April-16 to 30-Jun-16)

Net Profit: Tk. 48,199,648( 01-April-16 to 30-Jun-16)

Employees: 596 (2016)

Main Competitors:

Kung Keng Ltd, Chungi Ltd, Ring Shine Ltd, Everway Textile Ltd, Dongbeng Ltd,

Dayue Bangladesh Ltd., Tamishna Yarn Dyeing Limited, Belly Yarn Dyeing

Limited, Crown Yarn Dyeing Limited, Paban Textile Limited, Queen South

Textiles (BD) Ltd, F M Dyeing Limited.

Sl SWOT Variables Description

Strengths

1 Brand loyalty The Quality of Company’s products to its customers have

enabled the company to capture significant market share in

the sector. We have a very strong customer base and

healthy business relationship and doing business for a long

time

2 Market share We have good market share in the export oriented sweater

industry.

3 Mass production setup High volume production capacity per unit time

5 Cost conscious business

Product costing in all the aspects (Production cost,

purchasing cost, market selling price and cost involved in the

entire supply chain is properly maintained to provide quality

product to its customer at a reasonable price.

6 Strong R & D for dyeing

and finishing

Research and Development activities for new product

development and existing product improvement, SIL has a

state of the art laboratory with experienced technician,

7 Low labour cost Countrywide low labour cost has enabled us to compete

with foreign competitors outside Bangladesh.

8 Capital investment

availability

SIL Always keen to develop new products and invest in new

profitable venture.

9 Raw material supply Trouble free supply of input materials for processing with a

wide range of dedicated manufacturers and suppliers.

10 Supportive management Support from the management for the managerial decision

making

11 High performance

machineries

State of the art high performance machinery for production

12 Production of value

added quality products

SIL produces quality dyed yarn for 100% export oriented

sweater industries.

Weakness

1 Slim profit margin Since SIL is engaged in producing single component of

production for sweater industries profit is relatively lower

than the composite sweater industry.

2 Work environment High temperature, heat, RH inside the production plant due

to processing machines exhaust except for the factory Office

and Lab as well head office which are properly air-

conditioned.

3 Physical Hazards Chances of accidents, physical damage to the workers,

process hazards such as Chemical Explosion etc.

4 Operatives fatigue Tiredness of operatives due to movement of materials

5 Fragmented company Different geographical location of value chain of the

company

6 Cost of maintenance and

spare parts

High cost of new spare parts and high cost of maintenance

(Consumables and technician)

Opportunity

1 Helped by the

government policy

All the Garments, Textile and backward linkage industries

enjoy special tax rates, Tax holidays and subsidies from the

government for the development of this sector.

2 Easy Bank loan All the industries involved in this sector to get finance easily

form any financial institute.

3 Market orders exports Huge volumes of orders from export oriented textile

industries

4 New developments in

dyes, pigments and

chemicals

New developments in dye stuff, pigments for colouring of

yarn, also in chemicals for less effluent loads and faster lead

time of production

5 Low cost dyes and

chemicals

Low cost of dyes and chemicals available in due to the high

competition in the dyestuff manufacturer

6 Mass production

capacity

Mass production capacity for different count of yarn is

available and the factory runs 24 hours and required power

for production is generated through gas generator.

Threats

1 Intense competition Global competition in this sector may affect the profitability

of the company

3 Government regulation Governments restriction if imposed will create new

complications

4 Political unrest Political unrest is a big threat for any company. A sound

political environment is required for a sustainable growth in

this sector.

5 Availability fuel for

steam generation

Bangladesh is going through natural GAS crisis which might

cause problem in textile and garments sector

6 Social awareness Social and employee welfare

7 High water consumption

/ effluent generation

High water consumption and effluent generation per unit of

product

8 Disposal of solid waste

generated from effluent

Sludge waste as by product during the effluent treatment

9 High inventory cost Inventory cost goes high if exchange rate fluctuates since

raw material for production is mostly imported from abroad.

10 Chances of high

environment pollution

The company established effluent treatment plant to control

pollution.


116

c) Analysis of the financial statements of last five years with reason(s) of fluctuating revenue/sales, other income, total income, cost of material, finance cost,

depreciation and amortization expense, other expense; changes of inventories, net profit before & after tax, EPS etc.

Particulars

01-Apr-16

to

30-Jun-16

01-Apr-15

to

31-Mar-16

(Re-stated)

01-Jan-15

to

31-Mar-15

01-Jan-14

to

31-Dec-14

01-Jan-13

to

31-Dec-13

(Re-stated)

01-Jan-12

to

31-Dec-12

01-Jan-11

to

31-Dec-11

Revenue 756,861,925 2,636,557,896 390,141,810 1,780,751,795 1,878,484,554 1,883,339,590 1,179,310,883

Other Income 12,466,474 8,772,225 749,707 5,278,561 7,611,179 6,517,548 3,484,615

Total Income 769,328,399 2,645,330,121 390,891,517 1,786,030,356 1,886,095,733 1,889,857,138 1,182,795,498

Cost of Material 669,410,501 2,331,681,538 346,930,751 1,576,699,811 1,667,224,358 1,725,232,206 1,067,359,827

Other Expenses 14,230,381 51,242,737 7,666,970 22,651,894 28,880,864 26,144,031 28,103,743

Finance Cost 16,131,226 123,982,237 21,950,951 94,903,033 135,797,935 129,299,474 86,133,559

Depreciation 12,891,947 52,197,137 8,595,248 37,410,904 35,626,136 32,674,511 33,768,610

Amortization 8,898 44,492 - - 4,643,837 - -

Inventory 1,184,165,958 1,380,280,441 689,510,352 799,961,176 781,725,397 792,562,751 609,129,692

Changes of Inventory -14.21% 8.83% -13.81% 2.33% -1.37% 30.11% 70.19%


Net profit after tax 48,199,648 131,347,828 12,041,477 76,313,041 34,969,372 1,787,003 1,018,614

EPS 0.46 4.37 1.36 8.62 3.95 0.2 0.12

Reason of Fluctuation:

Revenue

Sales of the company was almost steady year to year except in 2012 in which some new modern machineries were introduced in the production line to cope up with the

demand for which capacity as well as revenue of the company increased and in 2016 due to amalgamation with Shepherd Yarn Limited. However, a minor dropdown in

sales were observed in the year 2014 due to political unrest in the country over the year.

Other Income

Other income consists of interest on FDR, Rental income, Gain/(Loss) of sale of property plant & equipment if any, wastage sales etc. The major reason for fluctuation in

other income is for interest from FDR and Gain/(Loss) of sale of property plant & equipment.


117

Total Revenue

In fact combined effect of revenue and other income are reflected in total income. So the reasons for

fluctuation in the revenue and other income as stated above are the reason for fluctuation in total revenue.

Cost of Material

Company’s raw material consumption, overhead expenses and cost of production was efficiently managed and

the Cost of Goods sold was in a steady level. However a slight cost reduction is seen for which gross profit ratio

slightly increased over the years.

Finance Cost

The Company’s main source of debt finance is short term loan from bank which mainly depends on the import

of raw materials and discounting of export documents. When the sales increase, the company had to import

more material from overseas and more discounting of export documents to retain the cash flow unaffected

resulting in more short term loan from bank and more finance cost. Finance cost increased in the year 2012

with compared to 2011 due to significant increase in the sales and import. In the year 2014, finance cost

decreased considerably due to less discounting of export documents. In 31-03-2016 finance cost again

increased for amalgamation with the Shepherd Yarn Limited. However, the company has paid of 40.76 crore

short term bank loan which will reduce 6.00 crore (appx) finance cost in the coming years for which time

interest earned ratio will be better in the future.

Depreciation and Amortization

The depreciation slightly changed year to year due to some additions the company had made but in the year

ended 31-03-2016 and period ended 30-06-2016 depreciation considerably increased due to amalgamation

with the Shepherd Yarn Limited. The company had a balance of deferred revenue expenditure for

capitalization of pre-operating expenses which was fully amortized in the year 2013.

Other Expenses:

Other expenses were steady year to year but increased in 31-03-2016 due to amalgamation.

Change in Inventory

Inventory level was almost consistent year to year except in the year 2012 and 30-06-2016. In 2012 a

considerable growth was in the export sales resulting in more imports. In 31-03-2016 and 30-06-

2016considrable change of inventories of Shepherd Industries Limited were added due to the result of

amalgamation.

Net profit before & After Tax and Earning per Share (EPS)

The company’s net profit before and after tax considerably increased in the year 2013, 2014, 31-03-2015 & 31-

03-2016. In the year 2013, gross profit ratio increased from 8.02% to 11.25% due to reduction the cost of

material imported. In 2014, the main reason was for reduction in the finance cost due to less discounting of

export documents as stated earlier. The fluctuation in 31-03-2016 is mainly the result of amalgamation with

Shepherd Yarn Limited.

As EPS is calculated by dividing net profit after tax by weighted average number of shares and the company’s

net profit increased year to year for the reason as stated above, EPS of the company increased year to year as

there was no considerable allotment of new shares upto 2014. But in 31-3-2016, a considerable allotment of

shares was taken place for which EPS decreased.

d) Known trends, demands, commitments, events or uncertainties that are likely to have an effect on the

company’s business:

Though there are no known trends, events and/or uncertainties that shall have a material impact on the

company’s future business, the business operation of the Company may be affected by the following

events:

I. Decrease in demand of readymade garments products in the local and International

Market,

II. Increased production cost

III. Decrease in per unit sales price

IV. Increased Competition

V. Scarcity of GAS, Electricity and raw materials

VI. Govt. Policy Changes towards the industry,

VII. Political unrest

VIII. Natural disaster

e) Trends or expected fluctuations in liquidity:

The company has been operating with moderate liquidity. The company is currently enjoying working

capital facilities in different modes from various banks, through which it is managing liquidity and meeting

the import payments to procuring raw materials to carry out the production.

From the cash flow of the company, it has been revealed that the company can generate sufficient fund

internally to service its debt burden and other liabilities also. The company generated operating cash flow

of Tk.8,572,280 for the period ended June 30, 2016 to meet its liquidity and obligation.

f) Off-balance sheet agreements those have or likely to have a current or future effect on financial

condition:

There are no off-balance sheet agreements those have or likely to have a current or future effect on

financial condition.

SECTION (VIII): DIRECTORS AND OFFICERS a) Name, Father’s Name, age, Residential address, Educational qualification, experience and position of

each director and nominated director with nomination period, organization name:

Name Father’s

Name Age Residential address

Educational

Qualification Experience Position

Name of the

nominator and

duration of

nomination

Mr. Kao WEN

FU

Kao Ken

Yuan 60

4-FL-1, 250, Sec-4, Chung

Hsiau, E, RD. Taipei, Taiwan. BBA 36 Years

Managing

Director &

Director

N/A

Mr. Chung

Wen Kuei

Chung

A-Kuei 55

167 Dingcheng 3rd St. Xindia

Dist. New Taipei City 23153,

Taiwan (R.O.C).

Graduate 28 Years Chairman N/A

Lin Chih-Wen,

Nominated

Director

Lin-

Chin-

Sheng

55 6F-1, No. 538,Sec-4, Chung

Yang, N.RD, Taipei, Taiwan Graduate 36 Years Director

Ever Priority

Limited

(Nominated

from 20-04-15 to

till date)

Yang Ming TE,

Nominated

Director

Yang

Hsing 61

4-FL-1, 250, Sec-4, Chung

Hsiabu Br. Taipei, Taiwan Graduate 31 Years Director

Eternal Flame

Int’l Co. Inc.

(Nominated

from25-02-2016

to till date)

Md. Monzur

Alam Khan

Golam

Mostafa 46

Suite No. 12/09 & 12/10 (12th

Floor), Eastern Commercial

complex, 73 Kakrail, Dhaka-

1000

LLB (Hons),

LLM,

Barrister at

Law

23 years Independent

Director N/A

b) Date of first Directorship and Expiry of Current Tenure of the directors:

SL Name of the Director Position Date of first

Directorship

Date of Expiration of

Current term

1 Mr. Kao WEN FU Director & MD 28.09.2000 AGM of 2021

2 Mr. Chung Wen Kuei Chairman 12.11.2011 AGM of 2018

3 Lin Chi-Wen, Representative: Ever

Priority Ltd Nominated Director 20.04.2015

AGM of 2017

4 Yang Ming TE, Representative:

Eternal Flame Int’l Co. Inc Nominated Director 25.02.2016

AGM of 2017

5 Md. Monzur Alam Khan Independent Director 25.02.2016 AGM of 2019

c) Name of Interest and Involvement in other business/organization of directors:

Name Designation Directorship/Sponsorship/ Type of

Business Position

Ownership with other organization

Mr. Kao Wen Fu Managing

Director

Taiwan Food and Processing Industries

Limited

Food

Processing Chairman

Shepherd Textile (BD) Limited Textile Chairman

Mr. Chung Wen Kuei Chairman

Taiwan Food and Processing Industries

Limited

Food

Processing

Managing

Director

Shepherd Textile (BD) Limited Textile Shareholder

Mr. Yang Ming Te

Representative of Eternal Flame Int’l

Co. Inc.

Director N/A -

Director

Lin Chih-Wen

Representative of Ever Priority

Limited Director N/A - Director

Md. Monzur Alam Khan Independent

Director

Legal Professional (Proprietorship

Business) Legal Service

Owner of Law

firm

*Involvement in Bangladeshi organizations is considered only.

d) Statement of if any Directors of the issuer are associated with the securities market in any manner and

any director of the issuer company is also director of any issuer of other listed securities during last

three years with dividend payment history and market performance:

Nether any of the director of SIL is associated with the security market in any manner nor become director

of other listed securities during last three years.

e) Family relationship (father, mother, spouse, brother, sister, son, daughter, spouse’s father, spouse’s

mother, spouse’s brother, spouse’s sister) among the directors and top five officers:

Family relationship among directors:

SL Name Designation Relationships

1 Mr. Kao WEN FU Director & Managing

Director

No family relation with other directors

2 Mr. Chung Wen Kuei Chairman No family relation with other directors

3 Li Chin-Wen, Nominated

Director of Ever-Priority

Limited

Nominated Director No family relation with other directors

4 Mr. Yang Ming Te

Nominated director of

Eternal Flame Int’l Co. Inc.

Nominated Director No family relation with other directors

5. Md. Monzur Alam Khan Independent Director No family relation with other directors

Family relationship among directors and top five officers of the Company:

There are no family relationship among the directors and top five officials of the company.

f) Brief description of other businesses of the directors:

Mr. Kao WEN FU(Managing Director)

Sl.

No. Name of Companies Date of Incorporation Nature of Business Equity capital

Position

1 Taiwan Food and Processing

Industries Limited

22nd

July 2013 Different Types of Food

Processing and export.

500,000 Chairman

2 Shepherd Textile (BD) Limited 16th

November 1997 Knit Fabrics Manufacturing. 46,058,800 Chairman

3 Shepherd Industries Limited 21st

August 2000 Dyeing of different count of

yarn 1,042,059,860

Managing

Director

Chung Wen Kuei (Chairman)

Sl.

No. Name of Companies

Date of

Incorporation Nature of Business Equity capital

Position

1 Taiwan Food and Processing Industries

Limited

22nd

July 2013 Different Types of Food

Processing and export.

500,000 Managing

Director

2 Shepherd Textile (BD) Limited 16

th November

1997 Knit Fabrics Manufacturing. 46,058,800

Shareholder

3 Shepherd Industries Limited 21st

August 2000 Dyeing of different count of yarn 1,042,059,860 Chairman

Li Chin-Wen (Representative Director of Ever-Priority Limited)

Mr. Lin Chih-Wen is not associated with any other business except Shepherd Industries Limited.

Yang Ming Te (Representative Director of Eternal Flame Int’l Co. Inc.)

Mr. Yang Ming-Te is not associated with any other business except Shepherd Industries Limited.

Mr. Monzur Alam Khan (Independent Director) Sl. No. Name of Companies Date of Commencement Nature of Business Equity capital Position

01 Legal professional 18/09/2014 Law Firm N/A(Proprietorship

business)

Proprietor

02 Shepherd Industries Limited 21

st August 2000

Dyeing of different

count of yarn 1,042,059,860

Independent

Director

g) Short bio-data of each director:

Mr. Chung Wen Kuei

Chairman

Chung Wen Kuei, is a Taiwan national and chairman of Shepherd Industries Limited. With 28 years working

experience in dying industry he made significant contribution to the development of Shepherd Industries

Limited. He always hunts for better quality in his products and maintain strong relations with the customers.

He is an expert in the dyeing industry.

Mr. Kao Wen Fu

Managing Director

Mr. Kao Wen Fu is a visionary entrepreneur investor and philanthropist. He established his first named venture

Pakistan Alfateme Textile in 1990 and thereafter he established Shepherd Textile (BD) Ltd at DEPZ in 1997, and

Shepherd Industries Ltd in 2000, Shepherd Yarn Ltd in 2005, Taiwan Food & Processing Ind. Ltd. in 2013. He is

vastly experienced in the textile and dying sector. He is a Taiwan national with dynamic leadership quality.

Under the leadership of Mr. Kao Wen Fu, Shepherd Industries Limited enjoyed huge business growth. Mr.

Kao’s Innovative business idea and ability to respond promptly to the contemporary changes in modern era’s

fashion and tastes are the keys to the success of Shepherd Industries Ltd. At his 60’s, he is still energetic and

dynamic. Mr. Kao visited many countries for business purpose.

Mr. Lin Chih-Wen

Director

Representative of Ever Priority Ltd.

Mr. Lin Chi-Wen has proven capability of contributing values in dyeing industries. He has 36 years of

professional experience in Nylon/Cotton/Polyester Dyeing Factory as Technical person. He is 55 years old with

dynamic leadership quality. He provides dynamic insights to the company’s affairs, which is outstanding to

accelerate the performance of SIL.

Mr. Yang Ming Te,

Director

Representative of Eternal Flame int’l Co. Inc.

Yang Ming Te, a Taiwanese national representing Eternal Flame Int’l.Co. Inc. in the board of Shepherd

Industries Limited. With more than 31 years in the dyeing industry, he managed to bring a broader vision in

sales, marketing and customer care. He always put positive impact towards the company to maximize wealth.

Mr. Md. Monzur Alam Khan


Barrister Monzur Alam Khan is the Independent Director of the company. Mr. Monzur is a barrister by

profession & completed his education in the UK. Previously he worked in Lee, Khan & Associates a commercial

law firm and lot of other reputed firms. He established his own law firm. Barrister Monzur is a charismatic

personality, hardworking creative person with lot of experience in handling corporate issues.

h) Loan status of the issuer, its directors and shareholders who hold 5% or more shares in the paid-up

capital of the issuer in terms of the CIB Report of Bangladesh Bank:

Neither the Company nor any of its Directors or shareholders who hold 5% or more shares in the paid up

capital of the issuer is loan defaulter in terms of the CIB report of Bangladesh Bank.


122

i) Name, position, educational qualification, age, date of joining in the company, overall experience (in year), previous employment, salary paid for the financial year

of the CEO, MD, CFO, CS, Advisers, Consultants and all Departmental Heads. If the Chairman, any director or any shareholder received any monthly salary than this

information should also be included:

Sl Name Position Educational

Qualification Age Date of Joining

Overall

experience Previous employment

Salary paid for the

Period ended April

01, 2016 to June

30, 2016

Salary paid for the

financial year April

01, 2015 to March

31, 2016

1 Mr. Abdul Mannan

Deputy Managing

Director& head of

Marketing

MBA 49 21.08.2000 25 Rajlakshmi Sweater,

CSD 839,555 2,913,002

2 Mr. Md. Ataur Rahman Chief Financial

Officer

B.Com (Hons), M.com,

LLB. 48 21.08.2000 19

TOP Stuff Limited,

Vanik Bangladesh

Limited

772,156 2,679,147

3 Abdullah Al Harun

Eusuf

Deputy general

Manager and Head

of commercial and

procurement

MBA 43 21.08.2000 18 Tallu Spinning Mills

Limited 599,509 2,080,114

4 Mohammed Abu Zafar Company Secretary MBA (Finance) 43 01.08.2005 11 SF Services Limited 276,000 921,520

5 Md. Moklesur Rahman Factory In-charge B.Com, LLB 40 01.01.2001 16 N/A 276,000 670,592

6 Md. Delwar Hossai Tax Consultant MA in English 65 01.01.2010 35 Commissioner of

Taxes (retired) 210,000 840,000

7 Li Zhi Yang Lab In-Charge BSc. Hons Chemistry 43 16.02.2016 15 Shepherd Textile (BD)

Ltd. 187,200 93,600

*None of the directors including Managing Director and Chairman did not enjoy any facilities from the company during that period.


123

j) Changes in the key management persons during the last three years:

No changes occurred in the key management persons during last three years.

k) A profile of the sponsors including their names, father’s names, age, personal addresses, educational

qualifications, and experiences in the business, positions/posts held in the past, directorship held, other

ventures of each sponsor and present position:

Name Father’s

Name

Age

(years) Personal address

Educational

Qualification

Experience

in Years

Position/Post Other

venture of

each

sponsor and

present

position

Present Past

Mr. Chen

Kuo Kung Chan Da

Lin 66

4FL-1, 250, Sec-4,

Chung Hsiau –ERD,

Taipei, Taiwan

Special

Education from

High School

35 - Director

-

Mr. Cheng

Che Seng Cheng Yen

Yuan 61

4FL-1, 250, Sec-4,

Chung Hsiau –ERD,

Taipei, Taiwan

Graduate 32 Sponsor

Shareholder Director

Shepherd

Textile

Limited

Ms. Chiu

Ching Ping Chiu Kuing

Ming 38

6F. No 1-1, Alley-17,

Lane 170, Sec-4, Chung

Hsiau ERD. Taipei,

Taiwan

MSc. in Finance 16 - Director

-

Mr. Yang

Ming-TE Yang Hsing 61

4FL-1, 250, Sec-4,

Chung Hsiau –ERD,

Taipei, Taiwan

Graduate 31 Representative

Director Director

-

Mr. Mafiz

Ahmed

Bhuyian

Late Sultan

Ahmed

Bhuiyan

-

Rose Villa, Flat # C-2,

House # 32A, Road-2,

Dhanmondi R/A,

Dhaka

- - - Managing

Director

-

A.K.M

Zakir

Hossain

Late Md.

Abdul Latif -

62, North Kafrul,

Dhaka Cant. Dhaka

Masters in

Economics - - Director

-

l) If the present directors are not the sponsors and control of the issuer was acquired within five years

immediately preceding the date of filing prospectus details regarding the acquisition of control, date of

acquisition, terms of acquisition, consideration paid for such acquisition etc.

Name Acquisition of

control

Date of

acquisition

Terms of

acquisition

Consideration paid for

such acquisition

Mr. Kao Wen Fu Managing Director 28/09/2000

No terms at

acquisition

Cash

Mr. Chung Wen Kuei Chairman 12/11/2011 Cash

Ever Priority Ltd Represented by Lin

Chih-Wen Director 26/07/2009 Cash

Eternal Flame Int’l Co. Inc

Represented by Yang Ming TE Director 14/02/2016 Cash

Md. Monzur Alam Khan Independent Director - Cash

m) If the sponsors/directors do not have experience in the proposed line of business, the fact explaining

how the proposed activities would be carried out/managed:

All the directors have adequate knowledge to carry out this line of business.

n) Interest of the key management persons:

There is no other interest of the key management except that remuneration/salary and allowances paid

to them as stated in serial (i) of this section.

o) All interests and facilities enjoyed by the directors, whether pecuniary or non-pecuniary:

None of the directors including Managing Director enjoyed any facilities. However the Managing Director

has recently received approval from Board of Investment Bangladesh and will start to receive

remuneration from July, 2016.Facilities whether pecuniary or non-pecuniary enjoyed by the Directors will

remain unchanged during the publication period of the Prospectus except the remuneration paid to the

Managing Director. Interest and facility is already disclosed in Executive Compensation of the Prospectus.

p)p)p)p) Number of shares held and percentage of shareholding (pre issue):

Sl. Name Position Total No of

Shares

Percentage of

Pre-IPO

1 Yang Ming TE Sponsor & Representative Director of

Eternal Flame Int’l Co. Inc. 1,320,000 1.27%

2 Kao Wen FU Managing Director 3,717,549 3.57%

3 Ever Priority Ltd. Director 43,035,650 41.30%

4 Mr. Cheng Che Seng Sponsor 1,720,680 1.65%

5 Mr. Chung Wen Kuei Chairman 3,261,415 3.13%

6 Eternal Flame Int’l Co. Inc. Director 10,886,580 10.45%

7 Mr. Md. Abdul Mannan Deputy Managing Director 1,100,000 1.06%

Total 65,041,874 62.43%

q) Change in board of directors during last three years:

Changes in the board of directors during last three years are as under:

Name Previous position Current Position Remarks

Ms. Chiu Ching Ping Director - Left the company by

transferring entire shares

on 26/09/2013

Mr. Chung Wen Kuei Director Chairman Joined the board as

chairman on 14/02/2016

Mr. Kao Wen FU Managing Director &

Chairman

Managing Director Resigned from the post

of Chairman and holding

the office of Managing

Director only from

14/02/2016

Mr. Yang Ming Te Director Representative Director

of Eternal Flame Int’l Co.

Inc.

Resigned from the post

of shareholder director

and joined the board as

representative of Eternal

Flame Int’l Co. Inc. on

25/02/2016

Mr. Cheng Che Seng Shareholding Director Shareholder Resigned from the post

of the Director on

25/02/2016

Md. Monzur Alam Khan - Independent Director Joined the board of

Shepherd Industries

Limited on 25/02/2016 to

ensure corporate

governance within the

industries

Mr. Shih Hsui Feng & Ms.

Chien U Huan

Representative Director

of Ever Priority Ltd.

Withdrawn Withdrawn by Ever

priority Ltd on

20/04/2015

Mr. Lin Chih-Wen - Representative Director

of Ever Priority Ltd.

Joined the board as

director on 20/04/2015

r) Director’s engagement with similar business:

None of the Directors are involved with similar business.


125

SECTION (IX): CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

a. Description of any transaction during the last five years, or any proposed transactions certified by the auditors, between the issuer and any of the following persons, giving the name

of the persons involved in the transaction, their relationship with the issuer, the nature of their interest in the transaction and amount of such interest.

TO WHOME IT MY CONCERN

This is to certify that the Financial Statements of Shepherd Industries Limited furnished for our audit does not have any transaction during the last five years, or any

proposed transaction, between the issuer and any of the following persons:

(i) Any director or sponsor or executive officer of the issuer

(ii) Any person holding 5 % or more of the outstanding shares of the issuer

(iii) Any related party or connected person of any of the above persons

Except the transactions described in the following table:

Relationship Nature of Transaction 30-Jun-16 31-Mar-16 01-Apr-15 31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11

Shepherd Textile (Bd) Ltd. Common Management Intercompany Loan 15,100,000 29,100,000 221,665,109 156,407,111 108,801,074 142,126,879 130,714,477

Sale of Land - (27,640,000) - - - - -

Rental Income (324,615) (1,220,929) - - - - -

Shepherd Yarn Ltd. Common Management Intercompany Loan - - - 176,412,296 126,461,362 85,788,138 97,085,507


Management but at

present no

relationship

Intercompany Loan - - - - 793,132 793,132 793,132

Shepherd Asia Zipper Ltd. - - - - 13,991,477 13,991,477 13,991,477

Shepherd Apparels Washing Limited - - - - 38,920 38,920 38,920

Fancy Yarn Department Connected Entity Advance for Purchase - - - - - - 145,117

Bentech Chemical Co. Ltd. Connected Entity Advance for Purchase - - - - - 30,083 -

Taiwan Food & Processing Industries Ltd. Common Management Intercompany Loan - - 57,684,848 38,919,589 10,754,639 - -

Investment 62,000,000 62,000,000 - - - - -

Rental Income (199,650) (728,116) - - - - -

Eternal Flame Int'l Co. Inc. Director Long Term Foreign Loan - - (38,505,032) (38,505,032) (38,505,032) (38,505,032) (38,505,032)

Interest on Foreign Loan - (11,625,225) (19,252,542) (19,252,542) (17,327,286) (15,402,030) (13,476,774)

Share Money deposit (4,351,405) (4,351,405) (127,605,337) (108,864,801) (108,864,801) (108,864,801) (108,864,801)

Kao Wen Fu Managing Director Share Money deposit (10,554,794) (10,554,794) (10,849,017) (294,223) (294,223) (294,223) (294,223)

Ever Priority Limited Director Share Money deposit (18,786,859) (18,786,859) (327,914,080) (323,556,499) (279,739,651) (279,739,651) (279,739,651)

Chen Che Seng Sponsor Share Money deposit (6,597) (6,597) (300,820) (294,223) (294,223) (294,223) (294,223)

Chung wen Kuei Chairman Share Money deposit (29,278) (29,278) (9,669,431) (9,640,153) (9,640,153) (9,640,153) (7,971,572)

Mr.Yang Ming Te Sponsor Share Money deposit - - (294,223) (294,223) (294,223) (294,223) (294,223)

Ms Chiu Ching Ping Ex-Director/Sponsor Share Money deposit - - (294,223) (294,223) (294,223) (294,223) (294,223)

** Figures in brackets indicates credit balances.

** Balance amount of share money deposit of Eternal Flame Int'l Co. Inc., Kao Wen Fu, Ever Priority Limite and Chen Che Seng trasferred to loan from shareholder during the period ended June 30, 2016

Place: Dhaka

SD/-

Date: 25 September 2016 MAHFEL HUQ & CO



126

b. Any transaction or arrangement entered into by the issuer or its subsidiary or associate or entity owned or significantly influenced by a person who is currently a

director or in any way connected with a director of either the issuer company or any of its subsidiaries/holding company or associate concerns, or who was a director or

connected in any way with a director at any time during the last three years prior to the issuance of the prospectus:

There is no transaction or arrangement entered into by the issuer or its subsidiary or associate or entity owned or significantly influenced by a person who is currently a

director or in any way connected with a director of either the issuer company or any of its subsidiaries/holding company or associate concerns, or who was a director or

connected in any way with a director at any time during the last three years prior to the issuance of the prospectus except the transaction mentioned in the section IX (a).

c. Any loans either taken or given from or to any director or any person connected with the director, clearly specifying details of such loan in the prospectus, and if any

loan has been taken from any such person who did not have any stake in the issuer, its holding company or its associate concerns prior to such loan, rate of interest

applicable, date of loan taken, date of maturity of loan, and present outstanding of such loan:

The company has not taken from or given to any loans to any director or any person connected with the director except loan taken from or given to related entity mentioned below: Relationship Nature of Transaction 30-Jun-16 31-Mar-16 01-Apr-15 31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11


Sale of Land - (27,640,000) - - - - -

Rental Income (324,615) (1,220,929) - - - - -



Management but at

present no

relationship






Taiwan Food & Processing Industries Ltd. Common Management Intercompany Loan - - 57,684,848 38,919,589 10,754,639 - -

Investment 62,000,000 62,000,000 - - - - -

Rental Income (199,650) (728,116) - - - - -

Eternal Flame Int'l Co. Inc. Director Long Term Foreign Loan - - (38,505,032) (38,505,032) (38,505,032) (38,505,032) (38,505,032)

Interest on Foreign Loan - (11,625,225) (19,252,542) (19,252,542) (17,327,286) (15,402,030) (13,476,774)

Share Money deposit (4,351,405) (4,351,405) (127,605,337) (108,864,801) (108,864,801) (108,864,801) (108,864,801)


Ever Priority Limited Director Share Money deposit (18,786,859) (18,786,859) (327,914,080) (323,556,499) (279,739,651) (279,739,651) (279,739,651)




Ms Chiu Ching Ping Ex-Director/Sponsor Share Money deposit - - (294,223) (294,223) (294,223) (294,223) (294,223)


127

SECTION (X): EXECUTIVE COMPENSATION

a) The total amount of remuneration/salary/perquisites paid to the top five salaried officers of the issuer in the last accounting year and the name and designation of each such officer:

SL Name Designation

Salaries for the period

ended April 01, 2016-

30 June, 2016 (Taka)

Salaries for the year

ended 31 March 2016

(Taka)

1 Mr. Md. Abdul Mannan Deputy Managing Director 839,555 2,913,002

2 Mr. Md. Ataur Rahman Chief Financial Officer 772,156 2,679,147

3 Mr. Abdullah Al Harun

Eusuf

Deputy General Manager& Head

of Commercial and Procurement 599,509 2,080,114

4 Mohammed Abu Jafar Company Secretary 276,000 921,520

5 Mr. Moklesur Rahman Factory In-Charge 276,000 670,592

Total 2,763,220 9,264,375

b) Aggregate amount of remuneration paid to all directors and officers as a group during the last accounting year:

Sl. Particular Nature of Payments

Remuneration for the period

ended April 01, 2016-30

June, 2016 (Taka)

Remuneration for the Year

ended March 31, 2016

(Taka)

1. Directors Remuneration Nil Nil

2. Officers and Staffs Salary and Allowances 16,288,826 45,194,796

Total 16,288,826 45,194,796

c) If any shareholder director received any monthly salary/perquisite/benefit it must be mentioned along

with date of approval in AGM/EGM, terms thereof and payments made during the last accounting year:

No Shareholder Directorof the company received any remuneration or perquisite benefit of Shepherd

Industries Limited during the period ended June 30, 2016.

d) The board meeting attendance fees received by the director including the managing director along with date of approval in AGM/EGM:

The Board of Directors did not receive any board meeting attendance fees.

e) Any contract with any director or officer providing for the payment of future compensation:

There is no such contract between the company and any of directors or officers regarding any future

compensation to be made to them.

f) If the issuer intends to substantially increase the remuneration paid to its directors and officers in the current year, appropriate information regarding thereto: The company has no plan for substantially increasing remuneration to its directors and/or officers except for those that are paid as annual increment to their salaries.

g) Any other benefit/facility provided to the above persons during the last accounting year: No other benefit/facility provided to the above persons during the last accounting year.

SECTION (XI): OPTIONS GRANTED TO DIRECTORS, OFFICERS AND EMPLOYEES The Shepherd Industries Limited did not grant any options to its directors, officers and/or any other employees for the purpose of issuing shares.

SECTION (XII): TRANSACTION WITH THE DIRECTORS AND SUBSCRIBERS TO THE MEMORANDUM

(a) a) The names of the directors and subscribers to the memorandum, the nature and amount of anything

of value received or to be received by the issuer from the above persons, or by the said persons, directly

or indirectly, from the issuer during the last five years along with the description of assets, services or

other consideration received or to be received;

The Directors and subscribers to the memorandum have not received any benefits directly or indirectly

during the last five years except allotment of share against cash and other than cash as stated in Section

i(g) of the prospectus.

(b) Directors and Subscribers’ Assets to the Company:

The issuer also has not received any assets, services or other considerations from its Directors and

subscribers to the memorandum exceptassets against allotment through amalgamation with Shepherd

Yarn Limited and land purchased from Mr. Mafiz Ahamed Bhuiyan following arms length transaction.

Details of the purchase from Mr. Mafiz Ahamed Bhuyian (Former sponsor Director and Shareholder) are as

under:

Sl

Names of the persons from

whom the lands have been

acquired

Deed

No Date

Area(Deci

mal)

Cost of

Acquisition Relation

1

Md. Mafiz Ahamed Bhuiyan

(Former sponsor

Shareholder and former

Managing Director of the

company)

4335 28-04-2011 432 39,931,000

Sponsor Director (left

the. company by

transferring his entire

shares)

Cost of acquisition of the aforesaid land amounting Tk. 39,931,000 was paid earlier only registration cost

amounting Tk. 3,995,225 was paid during the year.

SECTION (XIII): OWNERSHIP OF THE COMPANY’S SECURITIES

a) The names, addresses, BO ID Number of all shareholders of the company before IPO, indicating the amount of securities owned and the percentage of the securities represented by such ownership:

Sl. Name of the

Shareholders Position Address BO ID

No. of

Share

Percentage

Pre-IPO Post-

IPO

1 Yang Ming TE

Sponsor

Shareholder

4FL-1, 250, Sec-4, Chung

Hsiau –ERD, Taipei, Taiwan

1605550061237900 1,320,000 1.27% 1.06%


Director

4FL-1,Sec-4,Chung

Hslau E Rd,Taipel, Taiwan

(ROC) , N/A

1605550061233739 3,717,549 3.57% 2.99%

3 Ever Priority Ltd Director

6F-1, No.538, Sec-4,

Chung Yang N Rd, Taipei,

Taiwan , N/A

1605550061246691 43,035,650 41.30% 34.65%

4 Mr. Cheng Che Seng Sponsor

Shareholder

4-FL-1, 250, SEC-4, Chung

Hsiau, East Road, Taipei,

Taiwan , N/A

1605550061237927 1,720,680 1.65% 1.39%

5 Mr. Chung Wen Kuei Chairman

167 Dingcheng 3rd ST,

Xindlan Dist KL , New City

23153, Taiwan , N/A

1605550061237895 3,261,415 3.13% 2.63%

6 Mr. Seng Ming Hsiung Shareholder

2F., No.10, WANGZI 5th

st

Zhongli Street, TAOYUAN

City, 320, Taiwan (R.O>C)

1605550061237919 560 0.00% 0.00%

7 Eternal Flame

International co. Inc Director

4FL-250, Sec-4, Chung

Hsiau E Rd, Taipei, Taiwan

, N/A

1605550061246705 10,886,580 10.45% 8.76%

8 CHANG, HUNG-JUNG Shareholder

NO 5, Ln. 37, Fengshu 6th

St.,Guishan Dist.,

Taoyuan City 333, Taiwan

(R.O.C.) , N/A

1605550061222282 250,000 0.24% 0.20%

9 CHANG, SHIH-LIN Shareholder

12F.' NO.210, Xinfu- Rd.,

Fengshan Dist., Kaohsiung

City 830, Taiwan

1605550061222365 903,500 0.87% 0.73%

(R.O.C.) , N/A

10 CHANG, SHU-LING Shareholder

3F NO.7, Aly. 37, Ln. 600,

Wuxing St., Dist., Xinyi

Dist Taipei City

110, Taiwan (R.O.C.) , N/A

1605550061222258 661,761 0.64% 0.53%

11 CHEN HUANG, LEE-BE Shareholder

4F,: NO..17, Ln.

1,Xindong St., Songshan

Dist., Taipei City 105,

Taiwan (R.O.C.) , N/A

1605550061222241 1,787,735 1.72% 1.44%

12 CHEN XIAO YUAN Shareholder

Flat NO 402, Building 85,

Huatai, Garden No-2,

Daqiao, Jangyin City,

Jiangsu Province,China,

N/A

1605550061233811 600,000 0.58% 0.48%

13 CHEN, CHEN-YEN Shareholder

NO.39, Haojin Rd.,Puyan

Township,Changha

County 516, Taiwan

(R.O.C.) , N/A

1605550061222381 3,209,115 3.08% 2.58%

14 CHEN, SHU-FEN Shareholder

3F., NO.111-6, Sec. 1,

Chongyang Rd., Sanchong

Dist., New Taipei City

241, Taiwan (R.O.C.) , N/A

1605550061222274 1,400,000 1.34% 1.13%

15 HUANG, CHENG-FEI Shareholder

4F., No.911, Sec. 4, Bade

Rd., Nangang Dist, Taipei

City 115, Taiwan (R.O.C.) ,

N/A

1605550061222266 1,632,456 1.57% 1.31%

16 KAO CHI FU Shareholder

9F., No.106, Sec. 2,

Hankou St.,Wanhua Dist.,

Taipei City 108, Taiwan

(R.O.C.), N/A

1605550061233747 300,000 0.29% 0.24%

17 KAO, CHUN-CHE Shareholder

No. 12, Ln. 171, Sec. 1,

Daye Rd., Taoyuan Dist.,

Taoyuan City 330, Taiwan

(R.O.C.) , N/A

1605550061222357 1,807,001 1.73% 1.45%

18 KANG OK LEE Shareholder

703 HO, Hwanggym Plaza

Building 318-5,Shinjeongl,

Dong,Yang Cheou-Ku,

Seoul, Korea , N/A

1605550061233781 2,000,000 1.92% 1.61%

19 LEE, HUEI-CHUN Shareholder

10F. No.16, Ln. 201,

Huaide St., Bancqiao -Dist.,

New Taipei City 220,


1605550061222373 903,501 0.87% 0.73%

20 LI, HSING-CHIEH Shareholder

10F, NO 15. Jinmlng St.,

Luzhu Dist., Taoyuan

City,338, Taiwan (R.O.C.) ,

N/A

1605550061222330 652,665 0.63% 0.53%

21 LIANG, XIAO PING Shareholder

301,Unit 1, Building

1,NO.138, Jiefang South

Road, Chengzhong Zone,

Liuzhou,Guangxi,China,

N/A

1605550061233755 1,050,000 1.01% 0.85%

22 LIN, WEN-YU Shareholder

NO.21 ,Tianshui W. 3rd

St., Xltun Dist., Taichung


N/A

1605550061222231 3,974,048 3.81% 3.20%

23 LIU SHUANG-CHUAN , Shareholder

NO.38-30,Lancheng

Rd.,Yuanshan Township,

Yilan

County 264, Taiwan

(R.O.C.) , N/A

1605550061222306 2,500,000 2.40% 2.01%

24 LIU, LIANG-CHING Shareholder

NO..13, Liucuo, Xigang,

Dist., Tainan City 723,


1605550061233720 700,000 0.67% 0.56%

25 THITIPONG APITANOTA Shareholder

3056 Moo.14 Soi Santikam

8, Sukhumvit 109 Rd.,

North Samrong, Muang,

Samutprakarn. 10270 ,

N/A

1605550061233771 1,160,000 1.11% 0.93%

26 TSENG YA FEN Shareholder 4F,.,No.40, Qiaozhong 2nd 1605550061222314 2,428,750 2.33% 1.96%

St., Banqiao Dist., New

Taipei City 220, Taiwan

(R.O.C.) , N/A

27 WANG CHUN TA Shareholder

19F, NO.181 Sec.2

Wenhua 2nd Rd., Linkou

Dist, New Taipei City

24458 Taiwan (R.O.C.),N/A

1605550061233798 250,000 0.24% 0.20%

28 YANG BO-CHEN Shareholder

9F., NO.2-1, Zhongzheng

Rd., Luzhu Dist, Taoyuan

City 338, Taiwan

(R.O.C.) , N/A

1605550061222322 652,665 0.63% 0.53%

29 YANG, WAN-CHUN Shareholder

6F.,NO.5, Sec. 2,

Roosevelt Rd.,

Zhongzheng Dist., Taipei


N/A

1605550061222290 960,000 0.92% 0.77%

30 YAO JIAN ZHONG Shareholder

N0,12 Renmin

Road,Wutong

Street,Tongxlang

City,Theliang Province,

China , N/A

1605550061233763 1,160,000 1.11% 0.93%

31 YIN, SHIH-WEN Shareholder

4F., NO.3, Ln. 36, Shuiyuan

St. Yonghe

Dist., New Taipei City 234,


1605550061222349 3,220,355 3.09% 2.59%

32 MD.ABDUL MANNAN Shareholder

House-10 Road-3 Sector-

11 Uttara Dhaka-1230 ,

Dhaka

1605550061246713 1,100,000 1.06% 0.89%

33 ABU SALEH ABDUL

MUIZ Shareholder

Bakali House, House - 32,

Flat - 5B, Road-116,

Gulshan-01„ Dhaka

160555007748542 500,000 0.48% 0.40%

34 A. H. ENTERPRISE Shareholder 79/2, East Rampura,

Dhaka , Dhaka

1605550061258214 750,000 0.72% 0.60%

35 SYEDA LULU MUBIN Shareholder House- 08, Road- 11, Block

- E, Banani, Dhaka

1605550061455590 350,000 0.34% 0.28%

36 NAHID CHOWDHURY Shareholder

Apt-B3, House-52, Road

8/A, Dhanmondi R/A,

Dhaka-1209. ,Dhaka

1605550057725605 500,000 0.48% 0.40%

37 KONIKA KAISER Shareholder

House -- 29; Road -13,

Block -G, Niketon,

Gulshan, Dhaka , Dhaka

1605550061258206 100,000 0.10% 0.08%

38 Md. DELWAR HOSSAIN Shareholder

House 32, Road - 04, Block

- D, Banasree housing

Project, Rampura,

Dhaka , Dhaka

1203190011732275 100,000 0.10% 0.08%

39 AGRO ATMOSPHERE

LTD Shareholder

296 , Free School Street

(Ground Floor) ,

Kathalbagan Dhaka- 1205,

Dhaka

1205690057925356 750,000 0.72% 0.60%

40 J. K. ENTERPRISE LTD Shareholder

34, Atish Dipankar Road,

Sabujbag, Bashabo, Dhaka-

1214, Dhaka

1203680060785393 850,000 0.82% 0.68%

41 NADIA SHAH Shareholder

1A Summit Heaven, H-32,

Road # 9A, Dhanmondi,

R/A, Dhaka , Dhaka

1605550049331348 600,000 0.58% 0.48%

42 NUSRAT JAHAN RIMI Shareholder

90, Kalabagan, 2nd Lane,

New Market-1205, Dhaka.,

Dhaka

1605550050533472 300,000 0.29% 0.24%

43 MOHAMMAD ZULKER

NAIM Shareholder

12 Gausul Azam Avenue,

Sector # 13, Uttara, Dhaka-

1230 , Dhaka

1605550047499471 200,000 0.19% 0.16%

Total 104,205,986 100.00% 84%


131

b) There shall also be a table showing the name and address, age, experience, BO ID Number, TIN number, numbers of shares held including percentage, position held in other companies of all the directors before the public issue:

Sl. Name of the

Shareholders

Address Age Experie

nce

BO ID TIN No. of Share (%) Position held in other organization

other organization Position

1 Kao Wen FU 4FL-1,Sec-4,Chung

Hslau E Rd,Taipel, Taiwan

(ROC) , N/A

60 36

Years

1605550061233739 266448414596 3,717,549 3.57% Taiwan Food and

Processing

Industries Limited

Chairman

Shepherd Textile

(BD) Limited

2 Lin Chih-Wen

Representative of

Ever Priority Ltd

6F-1, No.538, Sec-4,

Chung Yang N Rd, Taipei,

Taiwan , N/A

55

36

Years

1605550061246691 ** 43,035,650 41.30% Shepherd Industries

Limited

Director

Ever Priority Limited

3 Mr. Chung Wen Kuei 167 Dingcheng 3rd ST,

Xindlan Dist KL , New City

23153, Taiwan , N/A

55 28

Years

1605550061237895 ** 3,261,415 3.13% Taiwan Food and

Processing

Industries Limited

Managing

Director

Shepherd Textile

(BD) Limited

Shareholder

4 Eternal Flame Int’l. Co.

INc. Represented by

Yang Ming Te

4FL-250, Sec-4, Chung

Hsiau E Rd, Taipei, Taiwan

, N/A

61

31

Years

1605550061246705 ** 10,886,580 10.45% Shepherd Industries

Limited

Director

5 Md. Monzur Alam Khan Suite No: 12/9, Eastern

Commercial Complex, 73

Kakrail, Dhaka-1000

46

23

years

- 131825935568 - 0.00% Md. Monzur Alam

khan, Barrister-at-

Law

Independent

Director

** No Tin number in Bangladesh as the directors are not working in Bangladesh and not receiving any remuneration.

c) The average cost of acquisition of equity shares by the directors certified by the auditors:

To Whom It May Concern

This is to certify that the shares in the equity of Shepherd Industries Limited have been allotted at face value in cash and other than cash and the average cost of

acquisition of equity by the directors is Tk. 10.00 each. Name wise shareholdings position, allotment date and consideration are given below:

Date of

Allotment

Allotment/

Transfer

Chen Kuo

Kung

Chiu Ching

Ping

Mafiz

Ahmed

Bhuiyan

A.K.M. Zakir

Hossain

Neaz

Ahmed

Bhuiyan

Ms.

Mahanur

Ummel Ara

Yang Ming

TE

Kao Wen

FU

Ever Priority

Ltd

Cheng Che

Seng

Chung

Wen Kuei

Shen

Ming

Hsiung

Eternal Flame

International

Considerati

on

Face

value of

Share

(Tk.)

01/08/2000

(Incorporation) Allotment

10,000

10,000

10,300

10,300

10,000 - -

10,000 - - - Cash 10

28-Sep-2000 Transfer (10,000)

10,000

- - - - Cash 10

01-Jul-02 Allotment

1,310,000 1,349,700 1,349,700

1,310,000 1,310,000 - 1,310,000 - - - Cash 10

09-Aug-05 Transfer

(1,360,000) 200,000 1,160,000

- Cash 10

26-Jul-09 Transfer

(1,360,000)

(200,000) (1,160,000)

- 2,720,000 - - - - Cash 10

12-Nov-11 Allotment

- - - - 857,400 - - Cash 10

26-Sep-13 Transfer

(1,320,000)

1,320,000

Cash 10

01-Apr-15 Allotment

(Amalgamation) - 1,780,660 6,640,000 400,680 1,440,000 660 -

Other than

Cash

10

17-May-15 Transfer

- - - - - (100) 100 Cash 10

14-Feb-16 Allotment

- 616,889 32,355,650

964,015

10,886,480 10

Total

Shareholding:

- - - - - - 1,320,000 3,717,549 43,035,650 1,720,680 3,261,415 560 10,886,580

*Face value of company’s share was Tk. 100/- each and was converted in to Tk. 10/- vide EGM dated June 08, 2015; Face value of shares on the above table was considered as Tk. 10/- for

better presentation.

Place: Dhaka

Sd/-

Mahfel Huq & Co.

Date: May 09, 2016



133

d) A detail description of capital built up in respect of shareholding (name-wise) of the issuer’s sponsors/ directors. In this connection, a statement to be included: - Yang Ming Te

Date of Allotment/ Transfer

of fully paid- up shares Consideration

Nature of

issue

No. of Equity

shares

Face

value

Issue Price/Acquisition

Price/Transfer Prices

Cumulative no. of

Equity shares

% Pre- issue paid

up capital

% Post issue paid up

capital

Sources of

fund

MOA & AOA Cash

Ordinary

Share

10,000 10 10

10,000 1.27% 1.06% Own Source

01-Jul-02 1,310,000 1,320,000

Kao Wen Fu

Date of Allotment/ Transfer

of fully paid- up shares Consideration

Nature of

issue

No. of Equity

shares

Face

value



Cumulative no. of

Equity shares

% Pre- issue paid

up capital


capital

Sources of

fund

01-Jul-02 Cash

Ordinary

Share

1,310,000

10 10

1,310,000

3.57% 2.99% Own Source

28-09-2000 (Transfer) Cash 10,000 1,320,000

01/04/2015 (Amalgamation) Other than

Cash 1,780,660 3,100,660

14-Feb-16 Cash 616,889 3,717,549

Ever Priority Ltd. (represented by Lin Chi-Wen)

Date of Allotment/ Transfer of

fully paid- up shares Consideration

Nature of

issue

No. of Equity

shares

Face

value

Issue

Price/Acquisition


Cumulative no. of

Equity shares

% Pre- issue paid

up capital


capital

Sources of

fund

(26-09-2013) Transfer Cash

Ordinary

Share

1,320,000

10 10

1,320,000

41.30% 34.65% Own Source

26-Jul-09 Cash 2,720,000 4,040,000


Cash 6,640,000 10,680,000

14-Feb-16 Cash 32,355,650 43,035,650

Cheng Che Seng



Nature of

issue

No. of Equity

shares

Face

value



Cumulative no. of

Equity shares

% Pre- issue paid

up capital


capital

Sources of

fund

01/08/2000 (Incorporation) Cash

Ordinary

Share

10,000

10 10

10,000

1.65% 1.39% Own Source 01-Jul-02 Cash 1,310,000 1,320,000


Cash 400,680 1,720,680

Chung Wen Kuei



Nature of

issue

No. of Equity

shares

Face

value



Cumulative no. of

Equity shares

% Pre- issue paid up

capital

% Post issue

paid up

capital

Sources of

fund

12-Nov-11 Cash

Ordinary

Share

857,400

10 10

857,400

3.13% 2.63% Own Source 01/04/2015 (Amalgamation) Other than

Cash 1,440,000 2,297,400

14-Feb-16 Cash 964,015 3,261,415

Eternal Flame Int’l Co. Inc.(represented by Yang Ming-TE)



Nature of

issue No. of Equity shares

Face

value

Issue Price/Acquisition Cumulative no. of

Equity shares

% Pre- issue paid

up capital


capital

Sources of

fund Price/Transfer

Prices

Transferred from Shen Ming

Hsiung 17/05/2015 Cash Ordinary

Share

100 10 10

100 10.45% 8.76% Own Source

14-Feb-16 10,886,480 10,886,580

*Face value of company’s share was Tk. 100/- each and was converted in to Tk. 10/- vide EGM dated June 08, 2015; Face value of shares on the above table was considered at Tk. 10/-.


135

e) Detail of shares issued by the company at a price lower than the issue price: All the shares are issued by the Company at face value of Tk. 10.00 before this issue.

f) History of significant (5% or more) changes in ownership of securities from inception:

Date of

Transfer Name of the Shareholders

Transferred

Quantity

% of

Transferred

Balance of

Shareholding

Name of the

Shareholders Transferred quantity

%

received

Balance

Shareholding

28/09/2000 Chun Kuo Keng 10,000 16.50% - Kao Wen Fu 10,000 16.50% 10000

09/08/2005 A K M Zakir Hossain 1,360,000 17.00% - Neaz Ahmed Bhuyian 200,000 2.50% 200,000

Mahnur Ummel Ara 1,160,000 14.50% 1,160,000

26/07/2009 Mafiz Ahmed Bhuyian 1,360,000 17.00% - Ever Priority Limited 1,360,000 17.00% 1,360,000

26/07/2009 Neaz Ahmed Bhuyian 200,000 2.50% - Ever Priority Limited 200,000 2.50% 1,560,000

26/07/2009 Mahnur Ummel Ara 1,160,000 14.50% - Ever Priority Limited 1,160,000 14.50% 2,720,000

26/09/2013 Chiu Ching Ping 1,320,000 14.90% - Ever Priority Limited 1,320,000 14.90% 4,040,000

GSECTION (XIV): CORPORATE GOVERNANCE

a) Management disclosure regarding compliance with the requirements of Corporate Governance Guidelines of the Bangladesh Securities and Exchange Commission (BSEC);

The Company declares that it has been complied with the requirements of the applicable regulations of

Corporate Governance Guidelines of Bangladesh Securities and Exchange Commission (BSEC) and accordingly

constitutes several committees under the board for good governance. A certificate of compliance from

competent authority has been incorporated accordingly.

Sd/-

Kao Wen Fu

Managing Director

Shepherd Industries Limited b) A compliance report of Corporate Governance requirements certified by competent authority;

CERTIFICATE ON CORPORATE GOVERNANCE COMPLIANCE

OF


We have examined the compliance to the BSEC guidelines on Corporate Governance by Shepherd Industries

Limited for the period from April 01, 2016 to June 30, 2016. These guidelines relate to the Notification no.

SEC/CMRRCD/2006-158/134/Admin/44 dated 7 August 2012 and subsequently amended through their notification

no. SEC/CMRRCD/2006-158/147/Admin/48 dated July 21, 2013 of Bangladesh Securities and Exchange

Commission (BSEC) on Corporate Governance.

Such compliance to the codes of Corporate Governance is the responsibility of the company. Our examination was

limited to the procedures and implementation thereof as adopted by the management in ensuring compliance to

the conditions of Corporate Governance.

In our opinion and to the best of our information and according to the explanations provided to us, we certify that

the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned

guidelines is issued by BSEC.

Place -Dhaka.

Date- September 25, 2016

Sd/-

Aftab Ahmed & Co.


Status of compliance with the conditions of Corporate Governance Guidelines as set by Bangladesh Securities

and Exchange Commission (BSEC) by the Notification No SEC/CMRRCD/2006-158/134/Admin/44 dated August

07, 2012 and subsequently amended through their notification no. SEC/CMRRCD/2006-158/147/Admin/48

dated July 21, 2013 issued under section 2CC of the Securities and Exchange Ordinance, 1969:

Condition

No. Title

Compliance Status Remarks

(If any) Complied Not

Complied

1. Board of Directors:

1.1 Board’s Size

The number of the board members of the company shall not be less

than 5(Five) and more than 20 (Twenty). √

1.2 Independent Directors:

1.2(i) At least one fifth (1/5) of the total number of directors in the

company’s board shall be independent directors.

√

Appointment

Date of

Independent

Director

25.02.2016

1.2(ii) a) Does not hold any share in the company or holds less than one

present (1%) shares of the total paid-up shares of the company; √

1.2(ii) b) The independent director does not a sponsor of the company and is

not connected with company’s any Sponsor/ Director/ Shareholder

who hold one present (1%) or more shares of the total paid -up

shares of the company on the basis of family relationship. His/her

family members also should not hold above mentioned shares of the

company.

√

1.2.(ii) c) Does not have any other relationship, whether pecuniary or

otherwise, with the company or its subsidiary/associated companies. √

1.2(ii) d) Not a member, director or officer of any stock exchange; √

1.2 (ii) e) Not a shareholder, director or officer of any member of stock

exchange or an intermediary of the capital market; √

1.2(ii) f) Not a partner or an executive or was not a partner or an executive

during the preceding 3(three) years of the concern company’s

statutory audit firm;

√

1.2(ii) g) Not be an independent director in more than 3 (three) listed

companies; √

1.2(ii ) h) Not been convicted by a court of competent jurisdiction as a

defaulter in payment of any loan to a bank or a Non-Bank Financial

Institution (NBFI);

√

1.2(ii) i) Not been convicted for a criminal offence involving moral turpitude. √

1.2(iii) The independent director(s) shall be appointed by the board of

directors and approved by the shareholders in the Annual General

Meeting (AGM).

√

Appointed by

the board of

Director on

25.02.2016

and Approved

by

shareholders in

AGM

1.2(iv) Not remain vacant for more than 90 (ninety) days. √

1.2(v) Board shall lay down a code of conduct of all Board members and

annual compliance of the code to be recorded. √

1.2(vi) The tenure of office of an independent director shall be for a period

of 3 (three) years, which may be extended for 1 (one) term only. √

1.3 Qualification of Independent Director (ID)

1.3(i) Independent director shall be knowledgeable individual with

integrity who is able to ensure compliance with financials, regulatory

and corporate laws and can make meaningful contribution to

√

business.

1.3(ii) The person should be a Business Leader/Corporate

Leader/Bureaucrat/University Teacher with Economics or Business

Studies or Law background/Professionals like Chartered

Accountants, Cost & Management Accountants and Chartered

Secretaries. The Independent director must have a least 12 (twelve)

years of corporate management/professional experiences.

√

1.3(iii) In special cases the above qualifications may be relaxed subject to

prior approval of the commission. N/A

1.4 Chairman of the Board and Chief Executive Officer

The positions of the Chairman of the Board and the Chief Executive

Officer of the companies shall be filled by different individuals. The

chairman of the company shall be elected from among the directors

of the company. The Board of Directors shall clarity define respective

roles and responsibilities of the chairman and the Chief Executive

Officer.

√

1.5 The Directors’ Report to Shareholders:

The director of the company shall include the following additional

statements in the Director’ Report prepared under section 184 of

the Companies Act, 1994 (Act No. XVIII of 1994)

√

1.5(i) Industry outlook and possible future developments in the industry. √

1.5(ii) Segment-wise or product-wise performance. N/A

1.5(iii) Risks and concerns. √

1.5(iv) Discussion on Cost of Goods sold, Gross Profit Margin and Net Profit

Margin. √

1.5(v) Discussion on continuity of any Extra-ordinary gain or loss. N/A

1.5(vi) Basis for related party transactions- a statement of all related party

transaction should be disclosed in the Annual Report.

√

1.5(vii) Utilization of proceeds from public issues, rights issues and/or

through any others instruments. N/A

1.5(viii) An explanation if the financial results deteriorate after the company

goes for IPO, RPO, Rights Offer, Direct Listing etc. N/A

1.5(ix) If significant variance occurs between Quarterly Financial

performance and Annual Financial Statements the management shall

explain about the variance on their Annual Report.

N/A

1.5(x) Remuneration to directors including independent directors. √

1.5(xi) The Financial Statements prepared by the management of the issuer

company present fairly its state of affairs, the result of its operation,

cash flows and changes in equity.

√

1.5(xii) Proper books of accounts of the issuer company have been

maintained.

√

1.5(xiii) Appropriate accounting policies have been consistently applied in

preparation of the financial statements and that the accounting

estimates are based on reasonable and prudent judgment.

√

1.5(xiv) International Accounting Standards (IAS)/Bangladesh Accounting

Standards (BAS)/International Financial Reporting Standards

(IFRS)/Bangladesh Financial Reporting Standards (BFRS), as

applicable in Bangladesh, have been followed in preparation of the

financial statements and any departure there-from has been

adequately disclosed.

√

1.5(xv) The system of internal control is sound in design and has been

effectively implemented and monitored. √

1.5(xvi) There are no significant doubts upon the issuer company's ability to

continue as a going concern. If the issuer company is not considered

to be a going concern, the fact along with reasons thereof should be

√

disclosed.

1.5(xvii) Significant deviations from the last year’s operating results of the

issuer company shall be highlighted and the reasons thereof should

be explained.

N/A

1.5(xviii) Key operating and financial data of at least preceding 5 (five) years shall be

summarized. √

1.5(xix) If the issuer company has not declared dividend (cash or stock) for

the year, the reasons thereof shall be given.

√

Due to

business

expansion

dividend was

not declared

1.5(xx) Number of board meetings held during the year and attendance by

each director shall be disclosed. √

1.5(xxi) Pattern of shareholding shall be reported to disclose the aggregate

number of shares held by:

1.5(xxi)a) Parent/Subsidiary/Associated Companies and other related parties

(name wise details). √

1.5(xxi)b) Directors, Chief Executive Officer, Company Secretary, Chief

Financial Officer, Head of Internal Audit and their spouses and minor

children (name wise details);

√

Only director

hold share of

the company

1.5(xxi)c) Executives. √

1.5(xxi)d) Shareholders holding ten percent (10%) or more vote’s interest in

the company (name wise details). √

1.5(xxii) In case of the appointment/re-appointment of a director the

company shall disclose the following information to the

shareholders:

1.5(xxii)a) A brief resume of the director; √

1.5(xxii)b) Nature of his/her expertise in specific functional areas; √

1.5(xxii)c) Names of companies in which the person also holds the directorship

and the membership of committees of the board. √

2. Chief Financial Officer (CFO), Head of Internal Audit and Company

secretary (CS)

2.1 Appointment

The company shall appoint a Chief Financial Officer (CFO), a Head of

Internal Audit (Internal Control and Compliance)and a Company

Secretary (CS). The Board of Director should clearly respective roles,

responsibilities and duties of the CFO, the Head of Internal Audit and

the CS.

√

2.2 Requirement to attend the Board Meetings

The CFO and the Company Secretary of the companies shall attend

the meeting of the Board of Directors, provided that the CFO and /or

the Company Secretary shall not attend such part of a meeting of the

Board of Directors which involves consideration of an agenda item

relating to their personal matters.

√

3. Audit Committee:

3(i) The company shall have an Audit Committee as a sub-committee of

the Board of Directors. √

3(ii) The Audit Committee shall assist the Board of Directors in ensuring

that the financial statements reflect true and fair view of the state of

affairs of the company and in ensuring a good monitoring system

within the business.

√

3(iii) The Audit Committee shall be responsible to the Board of Directors.

The duties of the Audit Committee shall be clearly set forth in

writing.

√

3.1 Constitution of the Audit Committee:

3.1(i) The Audit Committee shall be composed of at least 3 (three)

members. √

3.1(ii) The Board of Directors shall appoint members of the Audit

Committee who shall be directors of the company and shall include

at least 1 (one) independent director.

√

3.1(iii) All members of the audit committee should be “financially literate”

and at least 1 (one) member shall have accounting or related

financial management experience.

√

3.1(iv) When the term of service of the Committee members expires or

there is any circumstance causing any Committee member to be

unable to hold office until expiration of the term of service, thus

making the number of the Committee members to be lower than the

prescribed number of 3 (three) persons, the Board of Directors shall

appoint the new Committee member(s) to fill up the vacancy(ies)

immediately or not later than 1 (one) month from the date of

vacancy(ies) in the Committee to ensure continuity of the

performance of work of the Audit

Committee.

N/A

3.1(v) The company secretary shall act as the secretary of the Committee. √

3.1(vi) The quorum of the Audit Committee meeting shall not constitute

without at least 1 (one) independent director. √

3.2 Chairman of the audit committee:

3.2(i) The Board of Directors shall select 1 (one) member of the Audit

Committee to be Chairman of the Audit Committee, who shall be an

independent director.

√

3.2(ii) Chairman of the audit committee shall remain present in the Annual

General Meeting (AGM). √

3.3 Role of Audit Committee:

3.3(i) Oversee the financial reporting process. √

3.3(ii) Monitor choice of accounting policies and principles. √

3.3(iii) Monitor Internal Control Risk management process. √

3.3(iv) Oversee hiring and performance of external auditors. √

3.3(v) Review along with the management, the annual financial statements

before submission to the board for approval. √

3.3(vi) Review along with the management, the quarterly and half yearly

financial statements before submission to the board for approval. √

3.3(vii) Review the adequacy of internal audit function. √

3.3(vii) Review statement of significant related party transactions submitted

by the management. √

3.3(ix) Review Management Letters/Letter of Internal Control weakness

issued by statutory auditors. √

3.3(x) When money is raised through Initial Public Offering (IPO)/Repeat

Public Offering (RPO)/Rights Issue the company shall disclose to the

Audit Committee about the uses/applications of funds by major

category (capital expenditure, sales and marketing expenses,

working capital, etc), on a quarterly basis, as a part of their quarterly

declaration of financial results. Further, on an annual basis, the

company shall prepare a statement of funds utilized for the purposes

other than those stated in the offer document/prospectus.

N/A

3.4 Reporting of the Audit Committee:

3.4.1 Reporting to the Board of Directors √

3.4.1(i) The Audit Committee shall report on its activities to the Board of

Directors.

√

3.4.1(ii) The Audit committee shall immediately report to the Board of

Directors on the following findings, if any;

3.4.1(ii)a Report on conflicts of interests; N/A

3.4.1(ii)b Suspected or presumed fraud or irregularity or material defect in the

internal control system;

N/A

3.4.1(ii)c Suspected infringement of laws, including securities related laws,

rules and regulations;

N/A

3.4.1(ii)d Any other matter which shall be disclosed to the Board of Directors

immediately

N/A

3.4.2 Reporting to the Authorities.

If the Audit Committee has reported to the Board of Directors about

anything which has material impact on the financial condition and

results of operation and has discussed with the Board of Directors

and the management that any rectification is necessary and if the

Audit Committee shall report such finding to the commission, upon

reporting of such matters of the Board of Directors for three times or

completion of a period of 6 (six) months from the date of first

reporting to the Board of Directors, whichever is earlier.

- - N/A

3.5 Reporting to the Shareholders and General Investors.

Report on activities carried out by the Audit Committee, including

any report made to the Board of Directors under condition 3.4.1 (ii)

above during the year, shall be signed by the Chairman of the Audit

Committee and disclosed in the annual report of the issuer company.

√

4 External/Statutory Auditors: √

4(i) Appraisal or valuation services or Fairness opinions. √

4(ii) Financial information systems design and Implementation. √

4(iii) Book-keeping or other services related to the accounting record or

financial statements. √

4(iv) Broker-dealer services. N/A

4(v) Actuarial services N/A

4(vi) Internal audit services. √

4(vii) Any other service that the Audit Committee determines. √

4(viii) No partner or employees of the external audit firms shall possess

any share of the company they audit at least during the tenure of

their audit assignment of that company.

√

4(ix) Audit/Certification service on compliance of corporate governance

as required under clause (i) of condition 7.

√

5 Subsidiary Company:

5(i) Provisions relating to the composition of the Board of Directors of

the holding company shall be made applicable to the composition of

the Board of Directors of the subsidiary company.

N/A

5(ii) At least 1 (one) independent director on the Board of Directors of

the holding company shall be a director on the Board of Directors of

the subsidiary company.

N/A

5(iii) The minutes of the Board meeting of the subsidiary company shall

be placed for review at the following Board meeting of the holding

company.

N/A

5(iv) The minutes of the respective Board meeting of the holding

company shall state that they have reviewed the affairs of the

subsidiary company also.

N/A

5(v) The Audit Committee of the holding company shall also review the

financial statements, in particular the investments made by the

subsidiary company.

N/A

6 Duties of Chief Executive Officer (CEO) and Chief Financial Officer

(CFO):

6(i) The CEO and CFO shall certify to the Board that they have reviewed

financial statements for the year and that to the best of their √

knowledge and belief.

6(i)a) These statements do not contain any materially untrue statement or

omit any material fact or contain statements that might be

misleading;

√

6(i)b) These statements together present a true and fair view of the

company’s affairs and are in compliance with existing accounting

standards and applicable laws;

√

6(ii) There are, to the best of knowledge and belief, no transactions

entered into by the company during the year which are fraudulent,

illegal or violation of the company’s code of conduct.

√

7 Reporting and Compliance of Corporate Governance:

7(i) The company shall obtain a certificate from a practicing Professional

Accountant/Secretary (Chartered Accountant/Cost and Management

Accountant/Chartered Secretary) regarding compliance of conditions

of Corporate Governance Guidelines of the Commission and shall

send the same to the shareholders along with the Annual Report on

a yearly basis.

√

7(ii) The directors of the company shall state, in accordance with the

Annexure attached, in the directors' report whether the company

has complied with these conditions.

√

c) Details relating to the issuer's audit committee and remuneration committee, including the names of committee members and a summary of the terms of reference under which the committees operate.

In accordance with the currently accepted best practice and Corporate Governance Guidelines adopted by

Bangladesh Securities and Exchange Commission (BSEC), the board appointed audit committee and remuneration

committee comprises of the following:

Audit Committee Members Name Remuneration Committee Members Name

• Mr. Md. Monzur Alam Khan

(Independent Director) Chairman of

the Committee

• Mr. Kao Wen Fu, Managing Director

• Mr. Chung Wen Kuei, Chairman

• Mohammed Abu Zafar, Secretary of

the committee

• Mr. Kao Wen Fu-Chairman of the Committee

• Mr. Ataur Rahman

• Mr. Md. Abdul Mannan

• Mr. Mohammed Abu Zafar, Secretary to the

committee

• Mr. Md. Monzur Alam Khan (Independent

Director)

The terms of reference of the audit committee has been agreed upon as follows:

• To review all internal and external audit report.

• To recommend the statutory annual audited financial statements to the Board of Directors for approval.

• To review the finding of the internal and external auditors.

• To review and approve the Annual “Audit Plan” of the Internal Audit Department.

• To monitor the implementation of the recommendations of the Internal and External auditors.

• To review the performance of the external auditors and make recommendations to the Board regarding

their appointment and fees.

• To review the quarterly, half yearly and annual financial statements before submission to the Board.

• To review the company’s statement on internal control systems prior to endorsement by the Board.

• The company secretary shall be the secretary of the audit committee.

• To monitor choice of accounting policies and principles.

• To monitor internal control risk management process.

• To review the statement of related party transaction.

• To review the management letter issued by external auditor.

The terms of reference of the remunerationcommittee has been agreed upon as follows:

• To assist the Board in developing and administering a fair and transparent procedure for setting policy

on the remuneration of the directors and senior management of the company.

• To Determine the remuneration packages

• To Review the Annual Confidential report (ACR) of senior management of the company

• To Review and oversee the company’s overall human resource strategy

SECTION (XV): VALUATION REPORT OF SECURITIES PREPARED BY THE ISSUE MANAGER The valuation report of securities offered of Shepherd Industries Limited prepared by Issue manager on the basis

of financial and all other pertinent to the issue.

Qualitative& quantitative factors for valuation:

Qualitative justification:

1. Managed by the Qualified foreign investors

2. Equipped with State of the Art Technology

3. Properly structured and professionally run company

Quantitative justifications:

Primary valuation method for the company is considered on the basis of Net Assets Value based valuation,

Earnings based valuation per share and average market price of similar stock.

Methods 1: Share price on Net Asset Value (NAV)/ Equity based value per share:

Calculation of Methodologies

Method 1: Share price on Net Asset Value (NAV)/Equity based value per share

Sl. No. Particulars Amount (in Tk.)

a) Share Capital 1,042,059,860

b) Retained Earnings 353,760,682

c) Revaluation reserve 552,651,670

Total Shareholders' Equity (with revaluation reserve) 1,948,472,212

Total Shareholders' Equity (without revaluation reserve) 1,395,820,542

Number of Shares 104,205,986

Net Asset Value per share (with revaluation reserve) as per Audited Report as on 30 June, 2016 18.70

Net Asset Value per share (without revaluation reserve) as per Audited Report as on 30 June, 2016 13.39

Method 2: Historical Earnings based value per share

Average Price Earnings of Market & Sector

Month Sector Market

Jul-16 9.90 14.70

Aug-16 9.35 14.66

Sep-16 9.79 15.12

Average 9.68 14.83

Considering Lower P/E of 9.68 & 14.83 is 9.68

Source: DSE Monthly Review.

Period No. of Share Net Profit after

tax

Weight of No. of Shares Weighted Average of

Net Profit after tax

01-Jan-11 to 31-Dec-11 8,857,400 1,018,614 0.06 64,613

01-Jan-12 to 31-Dec-12 8,857,400 1,787,002 0.06 113,354

01-Jan-13 to 31-Dec-13 8,857,400 34,969,372 0.06 2,218,186

01-Jan-14 to 31-Dec-14 8,857,400 76,313,041 0.06 4,840,708

01-Jan-15 to 30-Jun-16 104,205,986 191,581,953 0.75 142,972,052

Total 139,635,586 1.00 150,208,913

No of shares outstanding before IPO 104,205,986

Diluted EPS based on weighted Average of Net Profit after Tax 1.44

Present Market P/E (Considering Lower P/E of 9.68 & 14.83 is 9.68) 9.68

Earnings based Value per share based on overall Market P/E 13.95

*As per section 9 of Finance Act 2015, all companies except Bank, Insurance or Financial Institutions shall change

its Financial Year Starting at July 01 and ending at June 30. To comply with the requirement of such section SIL has

changed its financial year to June 30. As such 18 months from o1 January 2015 to June 30, 2016’s earnings is

considered to calculate Earnings based Value per share.

Method 3: Average market price per share of similar stocks:

Last One Year (Month ended) Closing Share Price of Similar Stock

Anlima Yarn Dyeing Limited

Sl. No. Month Closing Price

1 29-Oct-15 22.7

2 30-Nov-15 19.4

3 31-Dec-15 21.9

4 31-Jan-16 22.9

5 29-Feb-16 21.9

6 31-Mar-16 22.9

7 28-Apr-16 25.4

8 28-May-16 25.4

9 30-Jun-16 28.3

10 31-Jul-16 34.9

11 31-Aug-16 30.5

12 29-Sep-16 30.5

Average Price 25.56

Sources of information: 1. Annual Report of the issuer company

2. Monthly review published by Dhaka Stock Exchange Ltd.

Therefore, the issue managers and management of the Company believes that the offering price of Tk. 10 per

share is justified.

Offer Price: Based on the above-mentioned valuation methodologies as per Bangladesh Securities and Exchange Commission

(Public Issue) Rules, 2015, the management of the company in consultation with the Issue Manager has set the

issue price at BDT 10.00 each at par value.

Reference and explanation of similarities:

Anlima Yarn Dying Limited is the only listed company engaged in yarn dying as there is no other yarn dying

company to consider the average price of similar stock of Shepherd Industries Limited, we have considered only

Anlima Yarn Dyeing Limited to calculate average market price. As a deemed exporter Anlima Yarn Dyeing Limited

dyed different types of cotton yarn which is used in sweater knitting industries and knit textile industries. And

the business nature of Shepherd Industries Limited is almost similar to Anlima Yarn Dyeing Limited. Thus, Anlima

Yarn Dying Limited is selected to calculate the average market price.

SECTION (XVI): DEBT SECURITIES

The company neither issued nor has any plan to issue any debt security within next six month.

SECTION (XVII): PARTIES INVOLVED AND THEIR RESPONSIBILITIES, AS APPLICABLE a. Issue manager

The issuer has appointed Alpha Capital Management Limited as issue manager to the issue for the public issue as

described in the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015. The issue manager

shall be entitled to fees and be responsibile for the issue including preparation and disclosures made in the

prospectusand all other responsibilities given in the due diligence and relevant securities laws.

b. Underwriters

The company has appointed Alpha Capital Management Limited as underwriter. The responsibility of the

underwriter is to take up the un-subscribed securities against the Initial Public Offering.

c. Auditors

The auditor of the company is Mahfel Huq & Company, Chartered Accountants.

Auditor’s responsibility is to express an opinion on the financial statements based on their audit. An Auditor will

conduct the audit in accordance with Bangladesh Standards on Auditing (BSA) is responsible for obtaining

reasonable assurance that the financial statements taken as a whole are free from material misstatement, whether

caused by fraud and error. Owing to the inherent limitations of an audit, there is an unavoidable risk that some

material misstatements of the financial statements may not be detected, even though the audit is properly

planned and performed in accordance with the BSAs.

d. Cost and Management Accountants

Not applicable for the companies

e. Valuers

The valuer of the company is Mridha and Associates.

The responsibility of the valuer is to value the property in accordance with International Valuation Standards (IVSs)

and condition and guidelines for valuation of assets by Bangladesh Securities and Exchange Commission (BSEC).

The valuer’s responsibility is to conduct and prepare and appraisal on valuation of land, factory building as owned

by the company. The purpose of the valuation is to identify the fair value of the assets & restate accordingly in the

books of accounts. Accordingly, the valuer have performed the necessary inspection, made relevant inquiries and

obtained such further information available for the purpose of providing the opinion on the value of land and

Building.

f. Credit Rating

Not Applicable as the company issuing share at par.

SECTION (XVIII): MATERIAL CONTRACTS The following are material contracts in the ordinary course of business, which have been entered into by the

Company:

(a) Major agreements entered into by the issuer;

i) Underwriting Agreement between the Company and the Underwriters.

ii) Issue Management Agreement between the Company and the Managers to the issue, Alpha Capital

Management Limited.

(b) Material parts of the agreements;

i. Material Parts of the Underwriting Agreement with ACML

Contract Material Parts of the agreement

Underwriting

Agreement With Alpha

Capital Management

Limited

Signing Date: April 20, 2016

Tenure: This Agreement shall be valid until completion of subscription of shares and unless

this Agreement is extended or earlier terminated in accordance with the terms of

this Agreement.

Principal Terms

and Contract:

If and to the extent that the shares offered to the public by a Prospectus

authorized hereunder shall not have been subscribed and paid for in cash in full by

the Closing Date, the Company shall within 10 (ten) days of the closure of

subscription call upon the underwriters in writing with a copy of the said writing to

the Bangladesh Securities and Exchange Commission, to subscribe the shares not

so subscribed by the closing date and to pay for in cash in full, inclusive of any

premium if applicable, for such unsubscribed shares within 15 (fifteen) days after

being called upon to do so. The amount so received shall be credited to the share

subscription account of the Company within the said period. If payment is made by

Cheque/Bank Draft by the Underwriter, it will be deemed that the Underwriter has

not fulfilled his obligation towards his underwriting commitment under this

Agreement, until such time as the Cheque/Bank Draft has been encased and the

Company’s share subscription account credited.

In any case within 7 (seven) days after the expiry of the aforesaid 15 (fifteen) days,

the Company shall send proof of subscription and payment by the Underwriters to

the Commission.

ii. Material Parts of the Issue Management Agreement with ACML:

Contract Material Parts of the agreement

Issue

Management

Agreement With

Alpha Capital

Management

Limited

Signing Date: January 06, 2016

Tenure: This Agreement shall be valid until completion of subscription of shares and unless this

Agreement is extended or earlier terminated in accordance with the terms of this

Agreement.

Principal Terms

and Contract: 1. MANAGER TO THE ISSUE

1.1. Subject to the terms and conditions hereunder, the Issuer shall engage

the Issue Manager for rendering services in relation to PUBLIC ISSUE.

1.2 That the Issue Manager shall act as the Manager to the Issue and

render financial advisory services to the PUBLIC ISSUE as described

hereunder in Clause 2.

2. SCOPE OF SERVICES

The scope of the services to be rendered by the Issue Manager to the Issuer

under this Agreement shall be as detailed hereunder:

2.1. CONSULTANCY SERVICE

I. Capital Structuring of the public issue.

II. Advice for documentation and preparation of related papers

III. Liaison with other financiers like Banks/ Institutions etc.

IV. Advice for making necessary amendments in the memorandum

and Articles of Association if needed before going for Public Issue.

2.2. ISSUE MANAGEMENT SERVICES

2.2.1. Regulatory compliance

i. Review the documents related to submission of prospectus

ii. Preparation of Prospectus

iii. Incorporation of modification suggested by the BSEC

iv. Preparation of all necessary papers and deeds for submission to

the BSEC for making the Public Issue effective

v. Follow up with BSEC

vi. Selection of main banker in consultation with the Issuer

vii. Obtaining approval from the BSEC

viii. Filing of the BSEC approved prospectus with Register of Joint

Stock Companies and Firms (RJSC).

2.2.2. Underwriting Co-operation

i. Placing of underwriting proposals to the potential underwriters

ii. Co-ordination with the Underwriters

iii. Documentation/Preparation of underwriting agreement etc.

2.2.3. After consent tasks

i. Filing of application for listing on Dhaka Stock Exchange Ltd.

(DSE) & Chittagong Stock Exchange Ltd. (CSE)

ii. Reply of the query, if any

iii. Monitoring of distribution of prospectus and form to banks and

members of DSE and CSE

iv. Monitoring of subscription

v. Monitoring of compliance issues.

2.3. The Issue Manager’s take such steps as are necessary to ensure

completion of allotment and dispatch of letters of allotment and refund

warrants to the applicants according to the basis of allotment approved

by the Bangladesh Securities and Exchange Commission. The Issuer

undertakes to bear all expenses relevant to the share application

processing, allotment and dispatch of letters of allotment and refund

warrant. The Issuer shall also bear all expenses related to printing and

issuance of share certificate and connected govt. stamps and hologram

expenses.

2.4. The Issue Manager’s will also monitor & co-ordinate the post issue work

as required by the Issuer.

2.5. Notwithstanding the above, if any other services required but not listed

herein above for the effective Public Issue shall be performed by the

same.

(c) Fees payable to different parties.

Fees for the issue management services:

As per Rule 14 of the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015, the Issue

Managers will get 1% on the Public Offering or Tk. 30.00 (Thirty) Lac whichever is lower as issue management

fee.

Commission for Underwriters:The Company shall pay to the underwriters an underwriting commission at the

rate of 1% of 35% of the total IPO amount (i.e. Tk. 70,000,000) of the issue value of shares underwritten by

them.

Copies of the above mentioned contracts and documents and the Consent Order from the Bangladesh Securities

and Exchange Commission may be inspected on any working day during office hours at the Company’s Registered

Office.

SECTION (XIX): OUTSTANDING LITIGATIONS, FINE OR PENALTY (a) The following outstanding litigations against the issuer or any of its directors and fine or penalty imposed

by any authority: The issuer or any of its directors was not involved in any of the following type of legal proceedings mentioned below;

(i) Litigation involving Civil Laws

(ii) Litigation involving Criminal Laws

(iii) Litigation involving Securities, Finance and Economic Laws

(iv) Litigation involving Labor Laws

(v) Litigation involving Taxation (Income tax, VAT, Customs Duty and any other taxes/duties)

(vi) Litigation involving any other Laws

(b) Outstanding cases filed by the Company or any of its directors:

(i) Litigation involving Civil Laws:The company suits a litigation against sale of yarn to New Horizon (BD)

Ltd. for US$ 60,000 following civil procedure in the court of 2nd

district Judge, Dhaka, Money Suit No. 16

of 2013 and still waiting for verdict.

(ii) Litigation involving Criminal Laws: No cases field by the company or any of its directors.

(iii) Litigation involving Securities, Finance and Economic Laws: No cases field by the company or any of its

directors.

(iv) Litigation involving Labor Laws: No cases field by the company or any of its directors.

(v) Litigation involving Taxation (Income tax, VAT, Customs Duty and any other taxes/duties): No cases

field by the company or any of its directors.

(vi) Litigation involving any other Laws: No cases field by the company or any of its directors.

SECTION (XX): RISK FACTORS AND MANAGEMENT’S PERCEPTION ABOUT THE RISKS

(i) Internal risk factors may include, among others:

a) Credit Risk:

This is the risk of default on a debt that may arise because of default by the borrower to pay the loan. In

operating any business there is always credit risk lies in the business. As there is always lending and borrowing

between parties in the form of money and goods.

Management Perception:

Management has credit policy in place and exposure to credit risk is well-monitored. In order to control the

credit risk the management ensure strong credit control and collection policies. We have highly dedicated team

to maintain credit policy.

b) Liquidity Risk:

The risk that a company may be unable to meet short term financial requirements. This usually occurs due to

the inability to convert its current assets to cash without a loss of capital or income. Liquidity is a common

phenomenon of the business.


Shepherd Industries Limited is doing its level best to manage working capital management in efficient way to

maintain liquidity risk. Management is dealing with accounts payable, inventory and accounts receivable

efficiently.

c) Risk associated with the issuer’s interest in subsidiaries, joint ventures and associates:

Management Perception: Shepherd Industries Limited has no subsidiaries, joint ventures and associate.

d) Significant revenue generated from limited number of customers, losing any one or more of which would

have a material adverse effect on the issuer.


Our management is always keen to find out new buyers to boost up the sales. So we are not dependent on any

particular or limited number of customers to operate our business. Moreover our reputation in the market

always gives us an extra cushion, we would also like to inform the investors we there is huge demand and

supply gap in this industry and we do not even meet up the 50% demand in supplying the dyed yard to our local

textile exporters.

e) Dependency on a single or few suppliers of raw materials, failure of which may affect production adversely.

Management Perception: We have a very strong supplier base. Being a Taiwanese owned company we

already built a reputation in the market and we built a huge reputation in this sector and purchase product

through strong supplier network.

f) More than 20% revenue of the issuer comes from sister concern or associate or subsidiary

Management Perception: We do not generate 20% or more revenue from any of our sister concerns or

associate or subsidiary.

g) Negative earnings, negative cash flows from operating activities, declining turnover or profitability, during

last five years, if any.

Management Perception: We have been operating our business efficiently. Cash flows from operating

activities of the company were always positive except in the year 2011.As we experienced huge growth in

business we experienced negative operating cash flow in the year 2011.The company managed and

maintained the receivable and inventory in an optimum level and with the upright trend of sales the company

did not experience any of the aforementioned issues in last five years.

h) Loss making associate/subsidiary/group companies of the issuer.

Management Perception: We do not have any investment in subsidiary or associates.

i) Financial weakness and poor performance of the issuer or any of its subsidiary or associates

Management Perception: We do not have any investment

j) Decline in value of any investment

Management Perception: The Company did not invested in any other business except Taiwan Food &

Processing Industries Limited; Taiwan food & Processing Industries Limited started their commercial operation

in 2014 and the venture will start making profit within a short span of time. Hence, risk of decline in value of

investment is negligible. However, the management of the company has withdrawn the investment of Tk. 6.20

crore in Taiwan Food and Processing Industries Limited on 21 September 2016 as decided the Board.

k) Risk associated with useful economic life of plant and machinery, if purchased in second hand or

reconditioned.

Management Perception: The Company is using machineries of the world’s most reputed and renowned brand

and most of them were imported in brand new condition. However, there are only few types of machinery

which were purchased in secondhand condition by completing all the formalities which, includes inspection by

the eligible surveyors, required to maintain the desired standard as approved by Bangladesh Customs

Authority.

l) Adverse effect on future cash flow if interest free loan given to related party or such loans taken from

directors may recall.

Management Perception: There were some transactions with related parties an i.e. intercompany transaction

normally occurs between the companies and usually interest free. The company provided loan to related

parties and also taken loan from related parties. The transactions occurred in both ways and all the parties

were mutually benefited from the transactions. Since, the company is converted into a public limited company

and to protect the interest of the shareholders the management of the company decided not to do any related

party transactions and started collecting the debt with the related entity.

m) Potential conflict of interest, if the sponsors or directors of the issuer are involved with one or more

ventures which are in the same line of activity or business as that of the issuer and if any supplier of raw

materials or major customer is related to the same sponsors or directors.

Management Perception: There is common management with one or more ventures but business activities

are not in the same line.

n) Related party transactions entered into by the company those may adversely affect competitive edge.

Management Perception: we would like to inform you that with the related party transactions between the

companies run under common management were to help each other. The management allowed inter-

company transactions. Since, the company decided to raise fund through IPO, management of the company

therefore, decided to close all related party transactions to protect the interest of the general shareholders.

Hence, the risk associated with the related party transactions is mitigated.

o) Any restrictive covenants in any shareholders' agreement, sponsors' agreement or any agreement for debt

or preference shares or any restrictive covenants of banks in respect of the loan/ credit limit and other

banking facilities.

Management Perception: There are no restrictive covenants in any shareholders’ agreement, sponsors’

agreement or any agreement relating to debt or preference shares or any restrictive covenants of Banks in

respect of loan or credit limit and other banking facilities.

p) Business operations may be adversely affected by strikes, work stoppages or increase in wage demands by

employees.

Management Perception: Shepherd Industries Limited is very much concern about compliance and employee

benefit. Since inception there was no issue by the employees i.e. work stoppages or any demand for increase

wage, because, the minimum wages of the company was always above the states defined minimum wage.

Hence, the employees are always satisfied as such there was no such issue related to employees. Strikes and

other political situations are beyond our control. The factory of the company is situated in industrial area and

political issues cannot affect the company’s production.

q) Seasonality of the business of the issuer

Management Perception: Shepherd industries Limited is engaged in the business of dyeing of different count

acrylic and cotton yarn and serving the textile industry as a backward linkage industry. Textile and garments

are the leading industrial sector of the country. Seasonality is observed in the business of Shepherd Industries

Limited. Pick time for the business is considered as February to September,

r) Expiry of any revenue generating contract that may adversely affect the business

Management Perception: In our country there are huge demands for dyed yarn for the textile industry. We

started our business when only few companies were in the yarn dyeing industry. With the sincere effort of the

management of Shepherd Industries Limited is doing business with reputation and we have a strong customer

base, sometimes we have to refuse orders of the customers due to huge demand of our product and due to

that reason management decided to go for expansion. Since we do not have any revenue generating contract,

we do not have any risks associated with the said term.

s) Excessive dependence on debt financing which may adversely affect the cash flow.

Management Perception: The Company is more focused on equity financing and has been reducing debt

dependency. The company raised its paid up capital recently and paid off substantial amount of debt. For last

five years we have been reducing our dependence on debt financing and it is now less than 1 in comparison

with debt to equity ratio.

t) Excessive dependence on any key management personnel absence of whom may have adverse effect on the

issuer’s business performance.

Management Perception: Corporate Governance is well practiced in our company. We have also well placed

organogram in our company. So any change in the key management can be replaced with other person. It is

mentioned-worthy that the industry is growing over 20 years. So we can hire key management as per our

needs.

u) Enforcement of contingent liabilities which may adversely affect financial condition.

Management Perception: We do not have any contingent liabilities which may adversely affect financial

condition.

v) Insurance coverage not adequately protect against certain risks of damages.

Management Perception: We have different insurance coverage for all the relating issues that are risky to

operating our business. While we maintain insurance coverage, in amounts which we believe are commercially

appropriate are taken into consideration. We may not have sufficient insurance coverage to cover all possible

economic losses as the losses are not always quantifiable. Additionally, there may be other risks which are

uninsurable of or not insurable in commercially acceptable terms. Apart from that the company’s insurance

policies are adequate for protection against risks of damages.

w) Absence of assurance that directors will continue its engagement with Company after expiry of lock in

period.

Management Perception: Our directors are involved in the business for long time and they will continue the

business after expiry of lock in period. The company has decided to offload only 16.10% shares to public so that

the general investors can get the benefit of Shepherd Industries Limited.

x) Ability to pay any dividends in future will depend upon future earnings, financial condition, cash flows,

working capital requirements and capital expenditure.

Management Perception: We have been a profitable entity over a long time and the profit is on the uptrend.

So we are in belief that we will be able to pay dividend from our earning profit. Our board of directors has a

strong intention to declare a handsome dividend to the shareholders of the company.

y) History of non-operation, if any:

Management perception: After the inception its commercial operation, our company has grown consistently.

It has achieved successes in every instance. Expertise and discretion of our management have made it possible.

The company never been in non-operative.

z) Risks related to Engagement in new type of business, if any:

Management perception:

Shepherd Industries Limited has decided to establish a washing plant within the existing factory premises of

the company. The management of the company has done a lot of groundwork on the business viability of the

washing plant. We have included a summary of the feasibility report in relation to the washing plant. While

conducting the study we found positive projected results. Therefore, engagement with the new type has

minimum risks and experience management has the ability to control those minor issues.

aa) Risk in investing the securities being offered with comparison to other available investment options.


Shepherd Industries Limited is a profitable entity over long time and the management operate the business

efficiently. There is a presence of certain degree of risk associated with investing the securities in the capital

market. The potential investors are requested to carefully read the prospectus and understand the business

potential of the company before make investment decision.

bb) Any penalty or action taken by any regulatory authorities for non-compliance with provisions of any law.


The management believes that it is highly unlikely of any penalty or action taken by any regulatory authorities

for non-compliance with provisions of any law.

cc) Litigations against the issuer for Tax and VAT related matters and other government claims, along with the

disclosures of amount, period for which such demands or claims are outstanding, financial implications and the

status of the case


The company doesn’t have any litigation relating to Tax, VAT or other government claims against the company.

dd) Registered office or factory building or place of operation is not owned by the issuer.


Registered office and factory building is owned by the Company.

ee) Lack of renewal of existing regulatory permissions/ licenses.


There is no such issue relating to lack of existing regulatory permissions/ licenses.

ff) Failure in holding AGM or declaring dividend or payment of interest by any listed securities of the issuer or

any of its subsidiaries or associates


There is no incident of failure in holding AGM or declaring dividend or payment of interest by the issuers.

gg) Issuances of securities at lower than the IPO offer price within one year


The company never issued any of its securities at lower than the IPO offer.

hh) Refusal of application for public issue of any securities of the issuer or any of its subsidiaries or associates at

any time by the Commission.


Bangladesh Securities and Exchange Commission (BSEC) has not refused of application for public issue of any

securities of the issuer or any of its subsidiaries or associates at any time

(ii) External Risk Factors may include among others:

a. Interest Rate Risks:

Interest rate is concerned with borrowed funds of short term & long-term maturity. Interest rate risk is

the risk that company faces due to unfavorable movements in the interest rate. Volatility in money

market & increasing demand for loans/investment funds raise the rate of interest. A change in the

government’s policy also tends to increase the interest rate. High rate of interest enhances the cost of

fund of a company. Such rise in the interest rates however mostly affect companies having floating rate

loans.

Management perception: The Management of SIL always emphasizes on the management of its finance

to an optimum capital structure of the company, so that the cost of capital remains minimum. The

management prefers to procure long-term loan with minimum interest rate and the short term fund with

reasonable competitive rate. Moreover, the company has been repaying borrowed funds on a continuous

basis. Additionally, the management of the Company emphasizes on equity base financing to reduce the

dependency on borrowing, suggesting the management perception for interest rate risk to have a minimal

impact on the company’s profitability and viability.

b. Exchange rate risks:

Exchange rate risk relates to the core business of Shepherd Industries Limited, since it mostly imports

materials from abroad in foreign currency. The Company imports raw various types of acrylic Industries

,dyes and chemicals against payment of foreign currency and the price of above materials in the

international market is relatively volatile. Unfavorable volatility or currency fluctuation may affect the

profitability of the Company.

Management perception: Shepherd Industries Limited mostly imports material from abroad in foreign

currency. As well, this company also sale out finished product to local export oriented sweater industries in

foreign currency. At the time of export documents negotiation/bills discounting 70% money kept by bank

in FC accounts for import payments. Balance amount keep for working capital and financial expenses.

Therefore fluctuation in exchange rate especially devaluation of local currency may significantly affect

Shepherd Industries Limited. However, Shepherd Industries Limited can significantly reduce the foreign

currency risk and price escalation risk through forward bookings if it is justifiable in terms of cost benefit

analysis. The company also maintains Economic Order Quantity (EOQ) for its material imports, which

provides considerable cushion against adverse movement of exchange rate and price in international

market.

c. Industry risks:

The Company is operating in an industry where there is a gap between demand and supply. Although

textile and yearn producing business has a huge demanding in the international market, chances are there

that excessive competition may hamper the company’s business. Increasing competition may force

Shepherd Industries Limited to reduce prices of their products which may cause dropping of their revenue

and margin, and/or decrease its market share, either of which could have an adverse effect on their

business, financial condition and results of operation.

Management perception: Shepherd Industries Limited is engaged in dyeing of different counts of Yarn.

The business has a huge demand. Moreover, Shepherd Industries Limited is still concerned about the

market competition and its highly competent research team always working for the development of

products. In addition, there are only few recognized competitors of similar size in the country, which allows

the benefit of economics of scale when competing with new entrants.

d. Economic and Political Risk

Bangladesh is prone to serious unrest in the political condition which produces Hartal, Road-blockade and

many other barriers to the business. This could also propel the cost of the products upwards.

Management perception: Although the country has passed through political turmoil in past few years a

sound political atmosphere is prevailing these days and expected to be continued in future.

e. Market and Technology-related Risks:

Market risks refer to the risk of the adverse market conditions affecting the sales and profitability of the

company. Mostly, the risk arises from falling demand for the product or service which would harm the

performance of the company. On the other hand, strong marketing and brand management would help

the company to increase their customer base.

Technology always plays a vital role for any business for ensuring better product quality, for providing

better services to the customers and for minimizing costs. SIL a technology based industry and continuous

technological improvement is an integral part of this business. Obsolete technology or machineries will

make it difficult for any company to sustain in such a competitive industry.

Management perception: Strong brand loyalty of the company’s products to its customers has enabled

the company to capture significant market share in the sector. And the company is continuously

penetrating into the market and upgrading the quality of the products to minimize the market risks.

Shepherd Industries Limited is always aware of technological advancement in the industry and adopt very

timely to keep the operational efficiency at the highest achievable level. The management frequently visit

the other foreign factories with similar line of business and technological fair in abroad for up-gradation of

technological and/or software.

f. Potential or existing government regulations:

Company’s sales and revenues are dependent on the aggregate demand of its products and also on the

country’s GDP. Any economic recession, changes in requirements, national income and other related

factors may cause to decline the market demand of the company products.

Management Perception: Over the last decade the macro economy of Bangladesh has developed

consistently; country’s GDP has increased remarkably and living standard of the people has been higher.

Most importantly, Government spending and public and private consumption have increased drastically.

All these macroeconomic features indicate larger economic activities in the country. Consequently,

demand for the company’s products has increased in multiple times. Our management perceives that this

economic trend will continue in the foreseeable future which will see good business profitability in the days

to come.

g. Potential changes in global or national policies:

The Company's product lines are primarily based on imported raw materials. Any scarcity due to

changes in policy in the international market might dent the production level and profitability. The

performance of the company may be affected due to unavoidable circumstances both in Bangladesh

and worldwide, as such political turmoil and disturbance in the country may adversely affect the

economy in general.

Management perception: The management of the company is always concerned about the prevailing and

future changes in the global and national policy and shall response appropriately and timely to safeguard

its interest. Shepherd Industries Limited's brand image and wide distribution network amongst its

customer group will always enable it to withstand any such potential threats. The company's supply chain

is robust in accommodating large number of suppliers with proper contingency plan in place. The company

can prosper in situation of political stability and a congenial business environment. Political turmoil and

the disturbance are bad for the economy and so also for the company.

h. Statutory clearance and approvals those are yet to be received by the Issuer

Management perception:All the required statutory approvals to run the day to day operation of the

business is obtained. So there is no such risk.

i. Competitive Condition of the Business:

Management Perception: Strong Brand Loyalty of the company’s product to its customer has enabled the

company to capture significant market share in the sector. Management is always aware about the

condition and the market team is continuously working to achieve significant growth to eliminate

competition.

j. Complementary and Supplementary Products/Services which may have impact on business of the

issuer

Management Perception: The Company has not faced any such challenges so far, Management is always

keen to look for new business opportunities sand if necessary will take required initiatives in future.

k. Operational risk:

Shortage of power supply, labor unrest, unavailability or price increase of raw material, natural calamities

like flood, cyclone, earth quack, fire etc. may disrupt the production of the Company and can adversely

impact the profitability of the Company.

Management perception: The compensation as well the benefit package will restrain the employees to

leave their assignment and go for any employee movement for higher benefit packages. The project of the

Company is situated at a high land where less amount of flood is recorded. The factory building has strong

RCC foundation, RCC floor, prefabricated steel structure to withstand wind, storm, rain etc. along with

good drainage facility. The risks from these factors are also covered through Insurance.

l. Changes in Environmental Laws and Regulations

Shepherd Industries Limited is subject to environmental laws and regulation which limits the discharge of

pollutants into the air water, sound, soil and established standards for the treatment, storage and

disposal of solid and hazardous wastes. These laws and regulations require investment of capital and

other expenditure for ensuring compliance. The operation of plant entail inherent risk of environmental

damages and the company may incur liabilities in the future arising from the discharge of pollutants into

the environment or waste disposal or hazardous material handling practices.

Management perception: Shepherd Industries Limited is highly conscious about its reputation in the local

government agencies. Hence regularly examine the environmental issues and concerns with potential

business activities. Moreover, Shepherd Industries Limited workers are provided with hand gloves and

masks, as per normal precautionary measures. Exhaust fans have been installed in the factories for better

and adequate ventilation.

Other Risks

a) Only two suppliers supplied 52.39% raw materials of the company for the period ended June 30, 2016

Management perception: These two suppliers are trusted and we have long term relationship with these

suppliers. Good quality raw materials are procured to SIL in competitive price. On the other hand, numbers of

suppliers of raw materials are plenty in the market, if one fails to provide raw materials there are always

another suppliers available. Thus, this risk may not create any disruption.

b) Risk related to increase of production cost, if the price of gas is increased resulting decrease of profit.

Management perception: If the price of gas increase production cost of SIL will also increase this will

ultimately reduce the net profit of the company. The same will happen to the other companies operating in the

similar industry. The management of the company will adjust the product price according to mitigate the effect

of increased gas price.

c) Risk related establishment of washing plant from IPO proceeds in which SIL has no previous business

experience.

Management perception: The management opted to establish a state of the art washing plant with washing

capacity of 8,000 dozens per day. SIL is operating in a backward linkage of garments and textile industry and

has a strong customer base who also needs garments wash. Considering the huge demand of garments wash

management of the company decided to go for establishment of washing plant. To establish washing plant, SIL

will recruit experience personnel for smooth operation of washing plant successfully.

d) Shepherd Industries Limited and Shepherd Textile Limited use same name shepherd. Thus, reputational

loss of one company may affect other company reputation

Management perception:. Both the companies are performing their business with reputation and good track

record of satisfying customers and employees need. Both the companies are operating business under common

name, if any of the companies are affected business of another company may also be affected. Both companies

are running under common management and have good corporate governance sense. The reputation was

earned overtime and will be maintained strictly and under no circumstances standard parameters will be

compromised strict. Companies are always ensured to mitigate such type of threats issued for using common

name.

e) The company has planned to establish washing plant for which the company has not obtained clearance

from the environment department yet which may create issues/problem for the establishment to going into

production.

Management Perception: The company will expand ETP for the proposed washing plant which is the

requirement of the environment department. The company treats its waste water through Biological ETP and

proposed extension will sufficient enough to treat the additional waste water of washing plant. The company

will apply to the environment department after establishment of washing plant and expansion of ETP and after

proper verification the department of environment will issue clearance or they may suggest some additional

work if they want. The company is always concern about the environment issues and will perform if any

additional tasks are required.

SECTION (XXI): DESCRIPTION OF THE ISSUE a) Issue Size:

I. Number of securities to be issued;

Public issue of 20,000,000 ordinary shares.

II. Authorized capital and paid-up capital;

Authorized capital: Tk. 1,900,000,000.00

Paid-up capital: Tk. 1,042,059,860.00

III. Face value, premium and offer price per unit of securities;

Face Value: Tk. 10.00

Offer Price per unit of securities: Tk. 10.00 at par

IV. Number of securities to be entitled for each category of applicants;

IPO size will be 20,000,000 ordinary shares @ TK. 10.00 each at partotaling Tk. 200,000,000.00. As per the

Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015, 10% of total Initial Public

Offering shall be reserved for mutual funds, 40% for other eligible investors (EIs), 10% for non-resident

Bangladeshi (NRB) and 40% for other general public. The position is thus as follows:

Category Particulars No of Ordinary

Shares

Issue

Price

per

Share

Total Amount

in BDT

For EIS

10% of IPO i.e. 2,000,000 Ordinary Shares shall be

reserved for Mutual Funds 2,000,000

10

20,000,000


reserved for Other Eligible Investors (Els) 8,000,000 80,000,000

For

General

Public


reserved for Non-Resident Bangladeshi (NRBs) 2,000,000 20,000,000


reserved for �� গ��and General Public 8,000,000 80,000,000

Total 20,000,000 200,000,000

V. Holding structure of different classes of securities before and after the issue;

The Company has issued only ordinary shares.

VI. Objective of the issue including financing requirements and feasibility in respect of enhanced paid-up

capital.

Net Proceeds from initial public offering (IPO) will be used for civil construction, acquisition and

installation of new machineries, Expansion of ETP, Repayment of loan and to meet the IPO expenses for

the Washing plant and BMRE of the existing unit.

Sl Particulars Amount in Tk.

1 Civil Construction 28,140,524

2 Machineries 96,970,692

i. Dyeing 56,510,220

ii. Washing 27,410,760

iii. Duties, Insurance, L/ C Commission, Inland Carrying, C&F 7,175,244

iv. Erection and Installation 5,874,469

6 Expansion of ETP 15,424,550

7 Repayment of short term loan 44,464,234

8 IPO Expenses 15,000,000

Total 200,000,000

Summary of feasibility report in respect of enhances paid up capital as prepared by Mr. Abu Sayeed Ahmed, FCA of

Aftab Ahmed & Co. is enclosed section (XXI)/k.

SECTION (XXII): USE OF PROCEEDS

USE OF PROCEEDS

SOURCES OF FUND:

Issue size (Number of share to be issued) Issue price Amount in Taka

20,000,000 Shares Tk. 10.00 per share at par 200,000,000

Net IPO Proceeds 200,000,000

Use of the net proceeds from the IPO:

Net Proceeds from initial public offering (IPO) will be used for civil construction (for washing Plant), acquisition and

installation of new machineries (for washing plant and expansion unit), Expansion of ETP (For Washing plant and

BMRE), to repay the short term bank loan of the company and to meet up the IPO expenses. The details of which is

stated as under:

Sl Particulars Amount in Tk.

1 Civil Construction 28,140,524

2 Machineries 96,970,692

i. Dyeing 56,510,220

ii. Washing 27,410,760

iii. Duties, Insurance, L/ C Commission, Inland Carrying, C&F 7,175,244

iv. Erection and Installation 5,874,469

3 Expansion of ETP 15,424,550

4 Repayment of short term loan 44,464,234

5 IPO Expenses 15,000,000

Total 200,000,000

BREAKDOWN OF IPO EXPENSES:

DETAILS OF BUILDING & OTHER CIVIL WORKS (FOR WASHING PLANT):

Sl. Particulars Area (sqft) Rate per sqft Amount in Tk.

A Factory Building with heavy foundation for

installing heavy machinery

23,750 1185 (Approx) 28,140,524

Total 28,140,524

1. Details of Factory Building with heavy foundation for installing heavy machinery:

General Specification:

Civil Construction work of Cast in situ Piling & Column by stone chip, Beam & Floor slab

by Brick Chips, Peripheral 5’’ Brick work up to 2’ height, Plaster and painting works.

Reinforcement: RSRM, BSRM,AKS, KSRM or Equivalent Quality

Concrete: Floor, Roof Slab & all Concrete casting by local mixer machine mix concrete in

project site and wooden shuttering.

Cement: Brand: Scan, Crown, Holcim.

Summary of the projected cost is as under:

1 Layout of the building as per drawing.

Mark Length (ft) Width (ft) Height (ft) Quantity Volume (Sft) Tk/Sft Amount (Tk)

Floor 110 43.18 1 1 4,750

Total 4,750 2 9,500

2

Mobilization & De-mobilization : Mobilization and cleaning site before commencing actual physical work and

during contract period and demobilization after completion of the Works.

Mark Length (ft) Width (ft) Height (ft) Quantity Volume (L/S) Tk Amount (Tk)

Cleaning 1 1

Total 1 80000 80,000

3

Pilling Works : RCC 20" Dia Cast in situ Piling 60'-0" Length and Reinforced cement concrete (1:1.5:3) works by

Shingles stone and best quality coarse sand and all complete with concrete cost, Poring cost, Boring, washing and

labour cost and all complete as per drawing and design.

Mark Length (ft) Width (ft) Height (ft) Quantity Volume (Rft) Tk/Rft Amount (Tk)

P1 1.66 60 42 2,520

Total 2,520 1320 3,326,400

4 Earth work in excavation

Mark Length (ft) Width (ft) Height (ft) Quantity Volume (Cft) Tk/cft Amount (Tk)

P1PC2 7 2.5 3.25 6 341

P1TCP 22.42 2.83 3.25 2 412

P1PC3 7.5 6.81 3.25 8 1,328

FLOOR 48 31 2.23 1 3,318

Total 5,400 8 43,200

5 Back Filling


FLOOR 60 40 1.08 1 2,592

Total 2,592 12 31,104

6 Sand Filling in Floor


FLOOR 106 38 3.016 1 12,150

Total 12,150 22 267,300

7 Preparation of bed Leveling , Dressing and compting:


GB 1 108 4 3 1,296

GB 2 40 3.1 6 744

GB 3 20 3 2 120

Total 2,160 12 25,920

8 3" Thick One layer of brick flat soling in foundation or in floor or Beam by first class:


P1PC2 7 2.83 6 119

P1TCP 22.42 2.5 2 112

P1PC3 7.5 6.81 8 409

FLOOR 36.4 40 1 1,456

GB 108 1 3 324

GB 40 1 6 240

GB3 20 1 2 40

Total 2,700 55 148,500

9 Polythene laying


P1PC2 7 2.83 6 119

P1TCP 22 2.5 2 110

P1PC3 7.5 6.78 8 407

FLOOR 44 40 1 1,760

GB 108 1 3 324

GB 40 1 6 240

GB3 20 1 2 40

Total 3,000 6 18,000

10 Reinforced cement concrete (1:1.5:3) works by Stone-chips using 20mm down well graded stone chips:


P1PC2 7 2.83 1.66 6 197

P1TCP 22.42 2.5 2.17 2 243

P1PC3 7.5 6.81 2.75 8 1,124

C1C2 1.17 1.83 57.29 4 491

C3C4C5 1.4 1.83 63 10 1,614

C6C7 1.4 2.17 57.29 4 696

GB 550 1 1.5 1 825

Total 5,190 310 1,608,900

11 Reinforced cement concrete (1:1.5:3) works by Brick chips using 1st Class Brick Chips


FLOOR 108 40 0.5 5 10,800

BEAM 608 1 1.66 5 5,046

ST BEAM 82 1 1.66 2 272

ST ROOF 25 16 0.5 2 400

RAMP 25 15 0.83 1 311

DRAIN 143.5 4.5 0.5 1 323

LINTEL 608 0.5 0.665 4 809

S SHADE 7 2 0.5 72 504

Total 18,465 280 5,170,200

12 Supplying, fabrication and fixing to details as per Design deformed bar reinforcement in concrete.

Mark Length (ft) Width (ft) Height (ft) Quantity Volume (Kg) Tk/Kg Amount (Tk)

FLOOR 52,640

BEAM 12,400

PILE 26,550

P CAP 9,800

COLUMN 19,920

ST BEAM 2,620

ST ROOF 4,290

RAMP 1,590

DRAIN 3,420

LINTEL 2,950

S SHADE 1,820

Total 138,000 75 10,350,000

13 Making , placing in position the Wooden centering Shuttering in position and removing accordingly.

Mark Length (ft) Width (ft) Height (ft) Quantity Volume (sft) Tk/sft Amount (Tk)

FLOOR 108 40 5 21,600

ST BEAM 82 3 2 492

F BEAM 608 3 5 9,120

COLUMN 63 8 18 9,072

ST ROOF 25 16 2 800

DRAIN 143.5 4.5 1 646

LINTEL 608 1.25 1 760

S SHADE 2.5 7 72 1,260

P1PC2 7 3.32 6 139

P1TCP 22.42 4.34 2 195

P1PC3 7.5 5.5 8 330

Eadge 1186 1 1 1,186

Total 45,600 35 1,596,000

14 125 mm thick Brick works in Peripheral Walls


FLOOR 296 1.8155 4 2,150

Total 2,150 85 182,750

15 250 mm thick Brick works in bellow of stair landing

Mark Length (ft) Width (ft) Height (ft) Quantity Volume (Cft) Tk/Cft Amount (Tk)

FLOOR 8.08 0.83 11 8 590

Total 590 165 97,350

16 Minimum 12 mm thick cement sand (F.M. 1.2) plaster in proportion (1:4)


FLOOR 108 40 6 25,920

ST BEAM 82 3 2 492

F BEAM 608 3 5 9,120

COLUMN 63 8 18 9,072

ST ROOF 25 16 4 1,600

DRAIN 143.5 6 1 861

LINTEL 608 1.25 1 760

S SHADE 2.5 7 2 72 2,520

5 WALL 296 2 1.8155 4 4,299

10 WALL 8.08 2 11 4 711

Eadge, BIT 3295 3,295

Total 58,650 35 2,052,750

17 Window Grills


Window 5.25 4.5 36 850

Total 850 125 106,250

18 Thai Aluminum & Glass Work


Window 5.25 4.5 36 850

Total 850 390 331,500

19 Wall Sheeting Works by .47mm Thick Industrial Profile sheet and Related bracing fittings.


Window 296 62.028 1 18,360

Total 18,360 110 2,019,600

20 Plastic Paint works


FLOOR 108 40 4 17,280

ST BEAM 82 3 1 246

F BEAM 608 3 4 7,296

COLUMN 63 8 18 9,072

ST ROOF 25 16 2 800

Eadge, BIT 956 956

Total 35,650 12 427,800

21 Weather Coat in wall


wall 296 2 1.8155 4 4,299

wall 8.08 1 11 4 356

Total 4,655 15 69,819

22 Roof Treatment by Water Proofing Chemical

Mark Length (ft) Width (ft) Height (ft) Quantity Volume (L/s) Tk Amount (Tk)

Roof 1 1 1

Total 1 177681 177,681

Total Amount For Civil Construction Works 28,140,524

2. Details of Capital Machineries required for the Expansion of dyeing unit and setting up of washing plant:

Sl. Name of Machineries Model Country of

Origin

Quantity

Sets

Unit Price US$ Cost of the machineries

US$ BDT

Dyi

ng

1 Radio Frequency Dryer for yarn packages with standard accessories GFD-85KW China 1 93,500 93,500 7,293,000

2 Radio Frequency Dryer for yarn packages with standard accessories GFD-85KW China 1 92,100 92,100 7,183,800

3 Hank to Cone Winding Machine 24 Spindles with standard accessories FH230D China 20 8,795 175,900 13,720,200

4 Horizontal Yarn Expansion Machine with standard accessories FH-420-6 China 5 1,500 7,500 585,000

5 Yarn Pressure and Yarn Carrier Machine with Standard Accessories - - -

i) Mode No YS20T China 1 12,000 12,000 936,000

ii) Mode No YS10T China 1 8,000 8,000 624,000

6 Dyeing Machine TDCH-125HP Taiwan 1 160,990 160,990 12,557,220

7 Dyeing Machine TDCH-150HP Taiwan 1 174,500 174,500 13,611,000

Sub total 724,490 56,510,220

Wa

shin

g

8 Industrial Washing Machine With standard accessories XSJ-300 China 40 3,426 137,040 10,689,120

9 Industrial Washing Machine With standard accessories XSJ-50 China 12 1,120 13,440 1,048,320

10 Industrial Drying Machine with Standard Accessories JN-150 China 40 3,240 129,600 10,108,800

11 Industrial Drying Machine with Standard Accessories GYJ-3 China 4 670 2,680 209,040

12 Industrial Hydro Extractor with Standard Accessories TSJ-42 China 4 2,410 9,640 751,920

13 Industrial Hydro Extractor with Standard Accessories TSJ-16 China 4 850 3,400 265,200

14 Hand Brushing Machine with Standard Accessories ML-1 China 30 110 3,300 257,400

15 Screw Air Compressor UT-50 China 4 2,780 11,120 867,360

16 Industrial Trolley for Dyeing with Standard Accessories China 80 280 22,400 1,747,200

17 Industrial Pallet Truck China 4 350 1,400 109,200

18 Industrial Ozone Sterilizing machine with standard accessories BF-YE-300g China 2 7,500 15,000 1,170,000

19 Industrial Air cooler B2-1.5 China 16 150 2,400 187,200

Sub Total 351,420 27,410,760

Total 1,075,910 83,920,980

Duties, Insurance, L/ C Commission, Inland Carrying, C&F 7,175,244

Erection and Installation 5,874,469

Total 96,970,692

*The company has planned to establish the Washing plant and expansion of the dyeing unit within the shortest possible time so that the proposed projects can start generating

revenue. In view of the above the company already started importing the machines through 360 days deferred L/C and the payment of which will be made after receiving the

IPO proceeds. For the remaining machineries to be imported the company has not placed any order yet. However, the management will place the order soon.


167

3. Details of ETP Expansion are as under:

General Specification:

Civil Construction work and Cast in Situ Piling works.

Reinforcement: RSRM, BSRM, AKS, KSRM or Equivalent Quality.

Concrete: Floor, wall, slab & all Concrete casting by local mixer machine mix concrete in project

site and wooden shuttering.

Cement: Brand: Scan, Crown, Holcim

Summary of the projected cost is as under:

1 Layout of the building as per drawing.


Floor 157.52 29.52 1 1 4,650

Total 4,650 2 9,300

2

Mobilization & De-mobilization : Mobilization and cleaning site before commencing actual physical work and

during contract period and demobilization after completion of the Works.

Mark Length (ft) Width (ft) Height (ft) Quantity Volume (L/S) Tk Amount (Tk)

Cleaning 1 1

Total 1 120000 120,000

3

Pilling Works : RCC 20" Dia Cast in situ Piling 45'-0" Length and Reinforced cement concrete (1:1.5:3) works by

Shingles stone and best quality coarse sand and all complete with concrete cost, Poring cost, Boring, washing

and labour cost and all complete as per drawing and design.

Mark Length (ft) Width (ft) Height (ft) Quantity Volume (rft) Tk/Rft Amount (Tk)

P1 1.66 45 27 1,215

Total 1,215 1320 1,603,800

4 Earth work in excavation


Tank 157 29 15.32 1 69,750

Total 69,750 8 558,000

5 Back Filling


T wall 372 0.53 15.32 1 3,000

Total 3,000 12 36,000

6 Sand Filling in Floor


FLOOR 158 28 0.565 1 2,500

Total 2,500 22 55,000

7 Preparation of bed Leveling , Dressing and compting:


Floor 157.52 29.52 1 1 4,650

Total 4,650 12 55,800

8 3" Thick One layer of brick flat soling in foundation or in floor or Beam by first class:


Floor 157.52 29.52 1 1 4,650

Total 4,650 55 255,750

9 Polythene laying


Floor 157.52 29.52 1 1 4,650

Total 4,650 6 27,900

10 Reinforced cement concrete (1:1.5:3) works by Stone-chips using 20mm down well graded stone chips:


BOTTO

M 155 28 1.83 1 7,940

P WALL 366 1.176 25 1 10,760

I WALL 84 1 25 1 2,100

Total 20,800 310 6,448,000

11 Supplying, fabrication and fixing to details as per Design deformed bar reinforcement in concrete.

Mark Length (ft) Width (ft) Height (ft) Quantity Volume (Kg) Tk/Kg Amount (Tk)

BOTTO

M 26,015

P WALL 21,808

I WALL 5,647

PILE 14,530

Total 68,000 75 5,100,000

12 Making , placing in position the Wooden centering Shuttering in position and removing accordingly.


P WALL 366 25 1 9,150

WALL

UP 366 8.6 1 3,150

I WALL 84 25 2 4,200

Total 16,500 35 577,500

13 Minimum 12 mm thick cement sand (F.M. 1.2) plaster in proportion (1:4)


P WALL 366 25 1 9,150

WALL

UP 366 8.6 1 3,150

I WALL 84 25 2 4,200

Total 16,500 35 577,500

Total Amount For Civil Construction Works 15,424,550

Sd/-

Ataur Rahman


Sd/-

Kao Wen Fu

Managing Director

Date: 10/11/2016

b) Where the sponsors' contribution or privately placed fund has been brought prior to the public issue and

has already deployed by the issuer, indication of use of such funds in the cash flow statement;

Tk. 850,865,860 (Eighty Five Crore Eight Lac Sixty Five Thousand Eight Hundred Sixty Only) has been raised

through sponsors’ contribution and private placement prior to public issue with the approval of Bangladesh

Securities and Exchange Commission no: BSEC/CI/CPLC-519/2015/582 on dated November 24, 2015. i.e. Tk.

407,627,520 received freshly received and the amount mentioned below is used to pay off short term bank

loan.

Accounting

Years

Item Amount Reflected in Cash Flow

2002 Acquisition of fixed

assets 1,176,890

In the Statement of Cash flows for the year ended

31 December 2002,the figure is included in the

head acquisition of assets under the Investing

activities


assets 7,249,072




activities

2007

Acquisition of fixed

assets

20,963,046




activities

Payment of long

term loan 27,529,911


31 December 2007,the figure is included in

decrease in long-term loan under the financing

activities

Working capital 218,187,781



movement of working capital under the head

operating activities

2008

Acquisition of fixed

assets 31,406,639



head acquisition of fixed assets under the

Investing activities

Payment of long

term loan 39,045,158



decrease in long-term loan under the financing

activities

Working capital 44,236,916



movement of working capital under the head

operating activities


assets 7,957,500



head Purchase under the Investing activities


assets 16,685,81





assets 43,816,847




2015 Short term loan

repayment 407,608,197


April 01, 2015 to March 31, 2016, the figure is

included in the head Short Term Loan

received/paid-Net under the Financing activities

c) If one of the objects is an investment in a joint venture, a subsidiary, an associate of the investment, brief

description of business and financials of such venture:

The issuer has no objects to invest in a joint venture, a subsidiary, an associate or any acquisition.

d) If IPO proceeds are not sufficient to complete the project, then source of additional fund must be

mentioned. In this connection, copies of contract to meet the additional funds are required to be submitted

to the Commission. The means and source of financing, including details of bridge loan or other financial

arrangement, which may be repaid from the proceeds of the issue along with utilization of such funds:

IPO proceeds are sufficient to complete the project except the working capital the balance of which will be

managed from the company’s own source.

Summary of project cost (washing plant and bmre of the dying unit) and means of finance are as under:

COST OF THE PROJECT Taka in ‘000’ Remarks

Items Total Cost From IPO From Own

Source

Land & Land Development Cost 7,875 - 7,875 Already

Incurred

Building and Civil Construction 44,437

i. Civil Construction 28,141 28,141 - To be incurred

ii. Expansion of ETP 15,425 15,425 - To be incurred

iii. Contingency 2% 871 -

871 To be incurred

if required

Plant and Machineries 107,880

i. For dying Unit 56,510 56,510 - To be incurred

ii. For Washing Unit 27,411 27,411 - To be incurred

iii. Duties, Insurance, L/ C Commission, Inland

Carrying, C&F

7,175 7,175 - To be incurred

iv. Erection & Installation 5,874 5,874 - To be incurred

v. Electrical Fittings (Annexure: 1) 10,910 - 10,910 To be incurred

Furniture & Fixture 88 - 88 To be incurred

Office Equipment's 160 - 160 To be incurred

Preliminary & Pre-operating Expenses 2,000 - 2,000 To be incurred

Total Fixed Cost 162,440 140,536 21,904 To be incurred

Net Working Capital 144,599 - 144,599 To be incurred

Total Project Cost/Means of Finance 307,039 140,536 166,503

Annexure: 01

Break down of Electrical Fittings required for installation of new machineries:

Item No Short Description Qnty Unit Rate in

taka

Amount in

taka

1.00 LIGHT FITTING

Supply & Installation of following light fitting including

Fitting, Fixtures, and bulb/lamp etc. all consumable

accessories and shall be as per recommendation of

manufacturer and direction of Engineer in charge. Product

shall be as mentioned brand or approved equivalent.

1.01 Single Tube light (TL/ETL): Supply &installation of Single

tube light with base frame, Electric blast and completed with

all accessories.

540 Nos 560 302,400

2.00 Exhaust Fan(EF): Supply & installation of Exhaust fan of 36"

sweep complete with all accessories. The product shall be

National or GFC or approved equivalent

40 Nos 15,600 624,000

3.00 SWITCH BOARD :

Supply & installation 10A /220V gang switches flush

mounted towel, concealed type of MK /Crabtee

/legrand/approvaed equivalent including the box of 16 SWG

galvanized sheet steel, Cover plate, SS machine screws,

Earthing block etc. complete with all accessories, Conforming

to BS1363.

3.01 4gang one way switch 25 set 940 23,500

4.00 SOCKETS :

Supply & installation 5A /13A/15A//20A/ 3PIN 220V

Combined switches and shuttered Socket flush mounted to

wall, concealed type of MK /Crabtee /legrand/approvaed

equivalent including the box of 16 SWG galvanized sheet

steel, Cover plate, SS machine screws, Earthing block etc.

complete with all accessories, Conforming to BS1363.

4.01 three pin socket (RS):1Gang 20A 3-pin Shuttered socket out

let with SP Switch at Switch board level

200 Nos 1,800 360,000

5.00 Distribution Board: 4 nos 150,000 600,000

Supply & installation DB/EDB/SDB/ESDB shall be constructed

with 16 SWG sheet steel clade, dust & vermin proof, flush

mounting in wall/Floor standing indoor type, painted with

power coted paint over a coat of primmer. all the boards

shall be housed with proper size of bas ber, Earthing ber

,insolator ,Volt Meter, Selector switch and Amp Meter, Surge

Protector for incoming MCCB/MCB Etc. Complete with all

accessories, ize of hear down electrolyte copper bas ber

shall be proposed by the bidder. all live wire and connection

shall be well protected. Panel shall concealed flush mounted

type having incoming breakers knob Extended beyond inner

skin of the panel. MCCB inside the panel shall not be less

than 16KA.The produced shall be

Schneider/Telemecanique/ABB/Legrand/MArlin Gerin or

approved Equivalent. All SDB/ESDB shall be accommodated

in one box and breakers installed as per drawing.

0

5.01 MDB- (At Substation Room) 1 set 250,000 250,000

32A SP MCB 6KA 35 Set 680 23800

100A TP MCCB 16KA 30 nos 14500 435000

150A TP MCCB 16KA 18 nos 25000 450000

250A TP MCCB 25KA 15 nos 20000 300000

350A TP MCCB 36KA 16 nos 67000 1072000

420A TP MCCB 65KA 11 nos 70000 770000

460A TP MCCB 65KA 15 nos 80000 1200000

- -

6.00 PVC CONDUIT:

6.01 EXPOSED CONDUIT:

Supply & laying of following water grade PVC pipe (2mm

thick)Concealed in ceiling Tray/Surface with galvanized

Saddle/Hanger as per routing showing the drawing,

Specification & direction. the rate should be inclusive change

for installation & pipe accessories such as bends, tee,

Sockets, Circular boxes, pull wire,18SWG m.s Sheet joint box

Etc. The joint should be done with PVC Solvent.

a 50mm dia 1500 RM 75 112,500

b 75mm dia 1380 RM 92 126,960

7.00 CABLE TRAY:

Supply & Installation of galvanized sheet steel cable /ladder

of following sizes incelling/false Ceiling area as per drawing

& driction. Cable tray shall be made of 16SWG sheet and

shall be pointed with two coat of anamel paint over a base

coat good for galvanized sheet and shall be hangered from

ceiling by using Galvanized steel bar of size 3mmx30mm @

of 1500mm interval & each change of driction,9mmdia

galvanized steel rod, lock nut, Expansion nut etc. all

accessories. The cable tray shall be of perforated tray.

7.01 600mm W x 75mm D Ladder 150 RM 1,800 270,000

7.02 PVC Insulated Cable:

Supply & laying of following PVC insulated fire retardant

Single/Four core cable BYA/BYM type with copper conductor

through per-laid conduit and cable duct /trunking as per

drawing, Specification & direction. The cable should be made

according to BS 6004 & BS 2004BDS 900/9001,1979.With

rated voltage 450/6750V.The product shall be

BRB/BBS/Eastern/Paradise or approved Equivalant.

7.03 1c-4 sqmm (BYA) 2500 RM 165 412,500

7.04 1X2c-10 sqmm (BYM) 1200 RM 560 672,000

8.00 PVC Insulated & PVC Sheated Cable:

Supply ,laying & termaination at following PVC insullated &

PVC Sheated single core cable (NYY/FR type)or PVC

Sheated/XLPE insulated (XPLE TYPE) with copper conductor

in pre laid pipe as per drawing,Specefication & direction.The

cable should be made according to VDE0271/3.69 &BDS-

901.85 WIYH RATED VOLTAGE 600/100V.The product shall

be BRB/BBS/Eastern/Paradise or approved Equivalant.

9.01 1C-400Sq mm NYY 200 RM 4,800 960,000

9.02 1C-300Sq mm NYY 250 RM 3,200 800,000

9.03 1C-35Sq mm NYY 125 RM 3,800 475,000

9.04 1C-16Sq mm NYY 125 RM 2,800 350,000

-

10.00 EARTH CONTINUTY CONDUCTOR (ecc) -

-

Supply ,laying& termination at following PVC insulated

ELECTROLYTIC copper earth continuity conductor (green

color) along the cable as per drawing ,specification & driction

.

-

-

10.01 1.5 Sq mm Ecc 175 RM 40 7,000

10.02 2.5 Sq mm Ecc 150 RM 65 9,750

10.03 10Sq mm Ecc 150 RM 220 33,000

-

-

11.00 Testing and commissioning : -

Testing, commissioning and balancing of the system shall be

done as per recommended practice and as per direction of

the Engineer- in-charge/Consultant. Measuring of all

equipment ,line ,conductor, Testing of insulation ,all

protective device ,Phase sequence, Polarity Permanent

phase marking etc. Shall be done in present of consultant

and proper document shall be submitted for approval.

1 job 270,317 270,317

GRAND-TOTAL AMOUNT TAKA 10,909,727

In words: One Corer Nine Lac Nine Thousand Seven Hundred Twenty Seven Taka Only.

e)Implementation schedule

Particulars Progress made so far Approximate date of

completion of project

Projected date of

commercial

operation

Civil Construction Civil construction will be started after

receiving of IPO fund

within 12 (Twelve)

months of receiving IPO

fund

Within three month

of the completion of

the project

Machineries,

Erection, Electrical

Fittings and

Installation

The company partially received some

machineries and the rest they are in a

process of placing order to the

supplier; through 360 day deferred

L/C and will pay the money after

receiving the IPO FUND

within 12 (Twelve)


fund

Expansion of ETP Expansion of ETP will be started after

receiving of IPO fund

within 18 (Eighteen)


fund

Repayment of

Loan

N/A within 3 (three) months

of receiving IPO fund

N/A

Sd/-

Ataur Rahman


Sd/-

Kao Wen Fu

Managing Director

f) Terms of contract:

As per Annexure-E(B)(21)(f) of the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015

there is no contract covering any of the activities of the issuer Company for which the proceeds of sale of

securities from IPO is to be used.

g) If one of the objects of the issue is utilization of the issue proceeds for working capital, basis of estimation

of working capital requirement along with the relevant assumptions, reasons for raising additional working

capital substantiating the same with relevant facts and figures and also the reasons for financing short with

long term investments and an item wise break-up of last three years working capital and next two years

projection;

No objectives of the issue are utilization of the issue proceeds for working capital

Item wise breakup of last three years working capital and next two years projection:

N/A

(h) Where the issuer proposes to undertake one or more activities like diversification, modernization,

expansion, etc. The total project cost activity-wise or project wise, as the case may be;

The company has planned to expand its activities through new business segment washing plant and expansion

of existing project with new machineries and installation of the same, ETP expansion and civil construction,

which have been mentioned in the Summary of feasibility report.

(i) Where the issuer is implementing the project in a phased manner, the cost of each phase, including the

phases, if any, which have already been implemented;

The company has already started importing machineries for the proposed washing plant and expansion of the

existing dying unit. The total import till for washing plant and expansion stands at Tk. 2.91 crore and the

payment of which will be made through 360days deferred L/C and the imported machineries will be installed

in the existing facilities of the factory premises and the rest expansion will be performed after the IPO

approval.

(j) The details of all existing or anticipated material transactions in relation to utilization of the issue

proceeds or project cost with sponsors, directors, key management personnel, associates and group

companies;

There is no existing or anticipated material transaction in relation to utilization of the issue proceeds or project

cost with sponsors, directors, key management personnel, associates and group companies.

(k) Summary of the project appraisal/ feasibility report by the relevant professional people with cost of the

project and means of finance, weaknesses and threats, if any, as given in the appraisal/ feasibility report.

Summary of feasibility report in respect of enhances paid up capital as prepared by Mr. Abu Sayeed Ahmed,

FCA of Aftab Ahmed & Co. is enclosed below:

Summary of Feasibility of Shepherd Industries Limited

EXECUTIVE SUMMARY:

Shepherd Industries Limited (SIL) is a 100% export oriented yarn dyeing Industry located in Bagrapara, Kathalia,

Bhaluka, Mymensingh a north-east district of Bangladesh. The company was established in 2000 with daily

capacity of dyeing of 20,000 LBS yarn per day and subsequently increased to 50,000 Lbs per day. The company

was incorporated as a private limited company on August 21 and subsequently converted into a public limited

company on June 08, 2015.

Shepherd Yarn Limited was amalgamated with Shepherd Industries Limited with the permission of the

Honorable high court division of The Supreme Court of Bangladesh with effect from April 01, 2015. After

amalgamation the capacity increased to 80,000 Lbs per day.

Shepherd Industries Limited is the pioneer amongst the dyeing industries in Bangladesh. With nearly 20 years

of experience of the management of Shepherd Industries Limited in dye industry, to cope with the increasing

demand, the management has now decided to expand the existing capacity of dyeing by 20,000 Lbs per day

with a cost of BDT 204.35 million including working capital of BDT 117.99 million. It has also decided to

establish a washing plant with the state of the art machineries and modern garments wash facilities with

capacity of 8,000 dozens per day with a cost of BDT 102.69 million including working capital of Tk. BDT 26.61

million.

After the expansion and establishment of the washing plant unit, the project is expected to generate a total of

BDT 3,766.74 million revenues in the first 5 years’ time having the Project IRR estimated to be 40.70%, ROE

20.42% in the first year and NPV BDT 404.45 Million at 12% Cost of Capital in the 10 years’ life time. The

proposed project shall earn a net profit to sales ratio of 12.53% in the 1st

year, while Break even sales is 219.99

million and project pay-back period is 3 years.

Shepherd Industries Limited expects BDT 140.54 million of total investment to be raised through Initial Public

offering (IPO) as part of the equity investment for the proposed project. Total additional capital requirement

for the proposed project will be BDT 307.04 million including working capital of BDT 144.60 million.

VISION:

SIL’s Vision aims to be:

� A company with trustworthy name for our consumers;

� Our customers' preferred supplier;

� A strong and sound company for our stakeholders; and

� An extraordinary place to work in

MISSION:

SIL has some clear mission in terms of financial and strategic perspectives which are as under:

� To serve our customers efficiently and effectively, fulfilling their needs and expectations

� To train and develop our employees

� To provide optimum return to our investors

� To utilize company resources efficiently and effectively so as to achieve comparative advantage over

our competitors.

� To gain sustainable market shares of the business in the days ahead

PRODUCTS OF THE COMPANY:

Dyed yarn of various specification, composition and qualities. After expansion washing of garments

shall be added as a service of the company.

PRODUCTION CAPACITY:

Post Expansion project as an integrated unit will have the following installed capacity:

Activity Existing Capacity /

day

Capacity to be increased

/ day

Capacity post Expansion

/ day

Yarn Dyeing 80,000 Lbs 20,000 Lbs 100,000 Lbs

Washing NIl 8,000 Dzs 8,000 Dzs

TECHNOLOGY CONSIDERATION:

Power:

The Prime Source of power will be project’s own Generator. The existing project already has 03(three)

sets of Gas Generator with capacity of 1,700 KVA, 1030 KW& 1030 KW for supplying the required

electricity to the Existing project. It has also 01 (one) set of Diesel Generator having capacity 260 KW

&and 03 (three) sets 250 KW as back-up generator. No further generator is required for the proposed

projects.

Water:

The total requirement of water for the project will make available from projects own Deep-Tube-well.

Gas:

SIL needs gas for captive power plant, boiler to generate steam. SIL meets the requirement of GAS from

TITAS Gas Transmission and Distribution Company Limited (TGTDCL)

PRODUCT MARKET PLACE:

SIL is the backward linkage industry of 100% export oriented local sweater industries who consumes

dyed yarn as raw materials of their goods and export to overseas market. Therefore as a 100% deemed

export the ultimate destination of the SIL’s product is the overseas market.

MARKETING TRATEGY:

After receiving the orders from the customers, SIL dye the yarn as per customers’ specification & colour

and deliver to the destination as specified by the customer. As export of the company is deemed export,

the company usually delivers the products to local destination. After establishing the washing plant, SIL

will wash the garments of 100% export oriented industries after receiving order and subsequently the

garments. The payment shall be received through L/cs.

6. SWOT ANALYSIS

Sl SWOT Variables Description

Strengths

1 Brand loyalty The Quality of Company’s products to its customers have

enabled the company to capture significant market share in

the sector. We have a very strong customer base and

healthy business relationship and doing business for a long

time

2 Market share We have good market share in the export oriented sweater

industry.

3 Mass production setup High volume production capacity per unit time

5 Cost conscious business

Product costing in all the aspects (Production cost,

purchasing cost, market selling price and cost involved in the

entire supply chain is properly maintained to provide quality

product to its customer at a reasonable price.

6 Strong R & D for dyeing

and finishing

Research and Development activities for new product

development and existing product improvement, SIL has a

state of the art laboratory with experienced technician,

7 Low labour cost Countrywide low labour cost has enabled us to compete

with foreign competitors outside Bangladesh.

8 Capital investment

availability

SIL Always keen to develop new products and invest in new

profitable venture.

9 Raw material supply Trouble free supply of input materials for processing with a

wide range of dedicated manufacturers and suppliers.

10 Supportive management Support from the management for the managerial decision

making

11 High performance

machineries

State of the art high performance machinery for production

12 Production of value

added quality products

SIL produces quality dyed yarn for 100% export oriented

sweater industries.

Weakness

1 Slim profit margin Since SIL is engaged in producing single component of

production for sweater industries profit is relatively lower

than the composite sweater industry.

2 Work environment High temperature, heat, RH inside the production plant due

to processing machines exhaust except for the factory Office

and Lab as well head office which are properly air-

conditioned.

3 Physical Hazards Chances of accidents, physical damage to the workers,

process hazards such as Chemical Explosion etc.

4 Operatives fatigue Tiredness of operatives due to movement of materials

5 Fragmented company Different geographical location of value chain of the

company

6 Cost of maintenance and

spare parts

High cost of new spare parts and high cost of maintenance

(Consumables and technician)

Opportunity

1 Helped by the

government policy

All the Garments, Textile and backward linkage industries enjoy

special tax rates, Tax holidays and subsidies from the government

for the development of this sector.

2 Easy Bank loan All the industries involved in this sector to get finance easily form

any financial institute.

3 Market orders exports Huge volumes of orders from export oriented textile industries

4 New developments in

dyes, pigments and

chemicals

New developments in dye stuff, pigments for colouring of yarn, also

in chemicals for less effluent loads and faster lead time of

production

5 Low cost dyes and

chemicals

Low cost of dyes and chemicals available in due to the high

competition in the dyestuff manufacturer

6 Mass production capacity Mass production capacity for different count of yarn is available and

the factory runs 24 hours and required power for production is

generated through gas generator.

Threats

1 Intense competition Global competition in this sector may affect the profitability of the

company

3 Government regulation Governments restriction if imposed will create new complications

4 Political unrest Political unrest is a big threat for any company. A sound political

environment is required for a sustainable growth in this sector.

5 Availability fuel for steam

generation

Bangladesh is going through natural GAS crisis which might cause

problem in textile and garments sector

6 Social awareness Social and employee welfare

7 High water consumption /

effluent generation

High water consumption and effluent generation per unit of product

8 Disposal of solid waste

generated from effluent

Sludge waste as by product during the effluent treatment

9 High inventory cost Inventory cost goes high if exchange rate fluctuates since raw

material for production is mostly imported from abroad.

FINANCIAL PROJECTIONS: Profitability potential of the proposed project has been estimated for five years of operation to assess the

financial viability of the project. The financial projections include estimates of sales, operating cost,

administrative and selling expenses and financial overheads.

The assumptions underlying the earning forecast are as under:

a. The project will operate for 280 days in a year two shifts operation basis of 16 hours per shift.

b. The capacity buildup has been assumed to be achieved gradually at the rate of 60%, 65%, 70%, 75% & 80

% of estimated attainable capacity in the 1st

, 2nd

, 3rd

, 4th

and 5th

year of operations and onwards.

c. The price of raw materials and finished goods have been assumed to remain constant throughout the

projected years of operation with the assumption that increase in the price of raw materials will be offset

by the corresponding increase in the price of Selling price.

d. Sales prices of the proposed product have been assumed on the basis of price of such products prevailing

in the market.

e. Stores and Spares for the Project has been calculated at 0.5%,1.0% , 1.5%, 2% and 2% for the 1st

, 2nd

, 3rd

,

4th

and 5th

year of the machinery.

f. The cost of repair and maintenance for the project has been calculated at 0.5%,1.0% , 1.5%, 2% and 2% for

the 1st

, 2nd

, 3rd

, 4th

and 5th

year on the building & civil construction.

g. Rent, Tax, Insurance etc. for the project has been calculated 1.00% every year on the fixed cost.

h. Annual increment of 10% has been considered for calculation of wages and salaries.

i. Depreciation has been charged on reducing balance method at the following rates

Machinery 10%

Building 10%

Furniture & Fixture 10%

Office Equipments 10%

j. Economic life of the project has been assumed to be 10 years without any major replacement.

SUMMARY OF PROJECT COST AND MEANS OF FINANCE:

COST OF THE PROJECT Taka in '000'

Items Foreign Currency Local Currency Total Cost

Land & Land Development Cost - 7,875 7,875

Building & Civil Works Cost - 44,436 44,436

Plant and Machineries 83,921 23,959 107,880

Furniture & Fixture - 88 88

Office Equipment's - 160 160

Preliminary & Pre-operating Expenses - 2,000 2,000

Total Fixed Cost 83,921 78,519 162,440

Net Working Capital - 144,599 144,599

Total Project Cost 83,921 223,118 307,039

MEANS OF FINANCE: Initial Public Offering 83,921 56,615 140,536

Own Source - 166,503 166,503

Total Equity 83,921 223,118 307,039

Total Means of Finance 83,921 223,118 307,039

ESTIMATED STATEMENT OF FINANCIAL POSITION Tk. In '000'

As the Closing day of Year -0 Year -1 Year -2 Year -3 Year -4 Year -5

ASSETS:

NON-CURRENT ASSETS:

Fixed Assets at Cost 160,440 160,440 160,440 160,440 160,440 160,440

Less: Accumulated Depreciation - 15,256 28,987 41,345 52,467 62,477

Net Fixed Assets 160,440 145,183 131,452 119,095 107,973 97,963

Preliminary & Pre-operating Expenses 2,000 1,600 1,200 800 400 -

Total Non-Current Assets 162,440 146,783 132,652 119,895 108,373 97,963

CURRENT ASSETS:

Inventory:

Raw Material - 217,330 235,441 253,552 271,663 289,774

Work in Process (WIP) - 4,176 4,514 4,854 5,195 5,528

Finished Goods (FG) - 14,505 15,791 16,979 18,173 19,338

Storage & Spares and Others - 187 373 560 747 747

Receivable - 241,965 269,925 290,500 310,975 330,962

Short Term Investment - - - - - -

Cash & Bank Balance 144,599 103,447 187,977 285,624 389,163 500,289

Total Current Assets 144,599 581,611 714,021 852,068 995,915 1,146,638

TOTAL ASSETS 307,039 728,394 846,673 971,963 1,104,288 1,244,601

EQUITY & LIABILITIES:

Equity:

Initial Public Offering

140,536

140,536

140,536

140,536

140,536 140,536

Own Source

166,503

166,503

166,503

166,503

166,503 166,503

Retained Earnings - 78,787 167,824 264,358 367,996 479,490

Total Equity & Reserve 307,039 385,826 474,863 571,397 675,035 786,528

Current Liabilities:

Accounts Payable 325,995 353,162 380,328 407,494 434,660

Salary & Wages - 2,669 2,936 3,203 3,470 3,737

Provision for Tax - 13,904 15,712 17,035 18,289 19,675

Total Current Liabilities - 342,568 371,810 400,566 429,253 458,073

TOTAL EQUITY & LIABILITIES 307,039 728,394 846,673 971,963 1,104,288 1,244,601

PROJECTED STATEMENT OF PROFIT & LOSS AND OTHER COMPREHENSIVE INCOME:

Particulars Taka in '000'

Year -1 Year -2 Year -3 Year -4 Year -5

Capacity Utilization 60% 65% 70% 75% 80%

Sales 628,589 702,730 757,548 811,813 866,062

Cost of Goods sold 524,258 584,837 629,416 673,778 717,085

Gross Profit 104,331 117,893 128,132 138,035 148,977

Operating Expense 11,640 13,144 14,563 16,107 17,808

Operating Profit 92,691 104,749 113,569 121,927 131,169

Financial Expenses - - - - -

Profit before Other Income 92,691 104,749 113,569 121,927 131,169

Income From Short Term Investment - - - - -

Income Before WPPF 92,691 104,749 113,569 121,927 131,169

Workers Participation Fund - - - - -

Profit after WPPF 92,691 104,749 113,569 121,927 131,169

Income Tax 13,904 15,712 17,035 18,289 19,675

Net Profit for the year 78,787 89,037 96,534 103,638 111,494

Last Year Balance - 78,787 167,824 264,358 367,996

Cumulative Retained Earnings 78,787 167,824 264,358 367,996 479,490

Ratios (%):-

Gross Profit to Sales 16.60% 16.78% 16.91% 17.00% 17.20%

Operating Profit to Sales 14.75% 14.91% 14.99% 15.02% 15.15%

Income after tax to Sales 12.53% 12.67% 12.74% 12.77% 12.87%

Return on Equity 20.42% 18.75% 16.89% 15.35% 14.18%

Income after tax to Fixed Cost 48.50% 54.81% 59.43% 63.80% 68.64%

Income after tax to Total Project Cost 25.66% 29.00% 31.44% 33.75% 36.31%

Pay –back period

The Pay Back period of the project is calculated to determine the period required to recuperate the original

investment outlay through the profits earned by the project. The calculated payback period of the project is 3

years.

Break even analysis

The break even analysis has been carried out the basis of cost and sales data of 3rd

year of operation and is

shown its work sheet. The project is expected to break even at 29.04% of the assumed capacity with sales

revenue of BDT 219.99 million i.e 20.28% of the rated capacity utilization.

`CONCLUSION AND RECOMMENDATION

The feasibility reveals that the project is viable considering all aspects. The demand of dyed yarn is very high

In Bangladesh and it is gradually increasing on consideration of development of RMG sector. Moreover, in

Bangladesh all the RMG industries do not have modern washing plant, who seeks washing of their garment

from outside. Therefore, it can be concluded that the project has the potential for investment so that it will

contribute in the sector of RMG as well as ultimate development of the country.

Place: Dhaka

Date: October 18, 2016

Sd/-

Aftab Ahmed & Co.


SECTION (XXIII): LOCK-IN (a) Ordinary shares of the issuer shall be subject to lock-in, from the date of issuance of prospectus or

commercial operation, whichever comes later, in the following manner:

(1) All shares held, at the time of according consent to the public offer, by sponsors, directors and shareholders

holding 5% or more shares, other than alternative investment funds, for 03(three) years;

(2) All shares allotted, before 02(two) years of according consent to the public offer, to any person, other than

alternative investment funds, for 03(three) years

(3) In case any existing sponsor or director of the issuer transfers any share to any person, other than existing

shareholders, within preceding 12 (twelve) months of submitting an application for raising of capital or initial

public offer (IPO), all shares held by those transferee shareholders, for 03(three) years;

(4) 25% of the shares allotted to eligible investors, for 03 (three) months and other 25% of the shares allotted

to them, for 06 (six) months;

(5) All shares held by alternative investment funds, for 01(one) year; and

(6) Shares allotted, within two years of according consent to the public offer, to any person other than the

shares mentioned in sub-rules (1), (2), (3), (4), and (5) above, for 01(one) year.

(b) The following table indicates the Lock-in status of the shareholders of Shepherd Industries Limited:

Sl Name BO ID Position Date of

Acquisition No of Shares Total %

*Lock-in

Period

1 Yang Ming TE 1605550061237900

Sponsor

MOA 10,000 1,320,000 1.27% 3 Years

01/07/2002 1,310,000

2 Kao Wen FU 1605550061233739

Managing

Director

01/07/2002 1,310,000

3,717,549 3.57% 3 Years 28/09/2000 10,000

01/04/2015 1,780,660

14/02/2016 616,889

3 Ever Priority Ltd

1605550061246691

Director

26/09/2013 1,320,000

43,035,650 41.30% 3 Years 26/07/2009

200,000

1,160,000

1,360,000

01/04/2015 6,640,000

14/02/2016 32,355,650

4 Mr. Cheng Che

Seng

1605550061237927

Sponsor

MOA 10,000

1,720,680 1.65% 3 Years 01/07/2002 1,310,000

01/04/2015 400,680

5 Mr. Chung Wen

Kuei

1605550061237895

Chairman

12/11/2011 857,400

3,261,415 3.13% 3 Years 01/04/2015 1,440,000

14/02/2016 964,015

6 Eternal Flame

International

1605550061246705 Director

17/05/2015 100 10,886,580 10.45% 3 Years

14/02/2016 10,886,480

7 Mr. Seng Ming

Hsiung

1605550061237919 Shareholder 01/04/2015 560 560 0.00% 1 Year

8 CHANG, HUNG-

JUNG 1605550061222282 Shareholder 14/02/2016 250,000 250,000 0.24% 1 Year

9 CHANG, SHIH-

LIN

1605550061222365 Shareholder 14/02/2016 903,500 903,500 0.87% 1 Year

10 CHANG, SHU-

LING


11 CHEN HUANG,

LEE-BE

1605550061222241 Shareholder 14/02/2016 1,787,735 1,787,735 1.72% 1 Year

12 CHEN XIAO

YUAN


13 CHEN, CHEN-

YEN


14 CHEN, SHU-FEN 1605550061222274 Shareholder 14/02/2016 1,400,000 1,400,000 1.34% 1 Year

15 HUANG, CHENG-

FEI


16 KAO CHI FU 1605550061233747 Shareholder 14/02/2016 300,000 300,000 0.29% 1 Year

17 KAO, CHUN-CHE 1605550061222357 Shareholder 14/02/2016 1,807,001 1,807,001 1.73% 1 Year

18 LEE KANGOK 1605550061233781 Shareholder 14/02/2016 2,000,000 2,000,000 1.92% 1 Year

19 LEE, HUEI-CHUN 1605550061222373 Shareholder 14/02/2016 903,501 903,501 0.87% 1 Year

20 LI, HS1NG-CHIEH 1605550061222330 Shareholder 14/02/2016 652,665 652,665 0.63% 1 Year

21 LIANG,

XIAOPING


22 LIN, WEN-YU 1605550061222231 Shareholder 14/02/2016 3,974,048 3,974,048 3.81% 1 Year

23 LIU SHUANG-

CHUAN ,


24 LIU, LIANG-

CHING


24 THITIPONG

APITANOTA


26 TSENG YA FEN 1605550061222314 Shareholder 14/02/2016 2,428,750 2,428,750 2.33% 1 Year

27 WANG CHUN TA 1605550061233798 Shareholder 14/02/2016 250,000 250,000 0.24% 1 Year

28 YANG BO-CHEN 1605550061222322 Shareholder 14/02/2016 652,665 652,665 0.63% 1 Year

29 YANG, WAN-

CHLTN


30 YAO JIANZHONG 1605550061233763 Shareholder 14/02/2016 1,160,000 1,160,000 1.11% 1 Year

31 YIN, SHIH-WEN 1605550061222349 Shareholder 14/02/2016 3,220,355 3,220,355 3.09% 1 Year

32 MD.ABDUL

MANNAN


33 ABU SALEH

ABDUL MUIZ


34 A. H.

ENTERPRISE


35 SYEDA LULU

MUBIN


36 NAHID

CHOWDHURY


37 KONIKA KAISER 1605550061258206 Shareholder 14/02/2016 100,000 100,000 0.10% 1 Year

38 Md. DELWAR

HOSSAIN


39

AGRO

ATMOSPHERE

LTD

1205690057925356

Shareholder 14/02/2016 750,000 750,000 0.72% 1 Year

40 J. K. ENTERPRISE

LTD


41 NADIA SHAH 1605550049331348 Shareholder 14/02/2016 600,000 600,000 0.58% 1 Year

42 NUSRAT JAHAN

RIMI


43 MOHAMMAD

ZULKER NAIM


Total 104,205,986 104,205,986 100%

*Note: Lock-in period starts from the issue date of prospectus

SECTION (XXIV): MARKETS FOR THE SECURITIES BEING OFFERED

Stock Exchanges:

The issuer shall apply to the following bourses for listing shares within 7 (seven) working days from the date of

consent accorded by the Commission to issue the prospectus:

Dhaka Stock Exchange Limited (DSE)

9/F, Motijheel C/A, Dhaka-1000; and

Declaration about Listing of Shares with

None of the Stock Exchanges, if for any reason, grant listing within 75 days from the closure of subscription,

any allotment in terms of this prospectus shall be void and the Company shall refund the subscription money

within fifteen days from the date of refusal for listing by the stock exchange, or from the date of expiry of the

said 75 (seventy-five) days, as the case may be.

In case of non-refund of the subscription money within the aforesaid fifteen days, the Company directors, in

addition to the issuer company, shall be collectively and severally liable for refund of the subscription money,

with interest at the rate of 2% (two percent) per month above the bank rate, to the subscribers concerned.

The issue manager, in addition to the issuer Company, shall ensure due compliance of the above mentioned

conditions and shall submit compliance report thereon to the Commission within seven days of expiry of the

aforesaid fifteen days’ time period allowed for refund of the subscription money.

Trading and Settlement;

Trading and Settlement Regulation of the stock exchanges will apply in respect of trading and settlement of

the shares of the Company.

THE ISSUE SHALL BE PLACED IN “N” CATEGORY

): MARKETS FOR THE SECURITIES BEING OFFERED


the Commission to issue the prospectus:

Dhaka Stock Exchange Limited (DSE)

1000; and

Chittagong Stock Exchange Limited (CSE)

CSE Building, 1080 Sheikh Mujib Road, Chittagong.

Declaration about Listing of Shares with Stock Exchanges:



from the date of refusal for listing by the stock exchange, or from the date of expiry of the

five) days, as the case may be.

refund of the subscription money within the aforesaid fifteen days, the Company directors, in

ition to the issuer company, shall be collectively and severally liable for refund of the subscription money,


issuer Company, shall ensure due compliance of the above mentioned


aforesaid fifteen days’ time period allowed for refund of the subscription money.


THE ISSUE SHALL BE PLACED IN “N” CATEGORY


Chittagong Stock Exchange Limited (CSE)

CSE Building, 1080 Sheikh Mujib Road, Chittagong.



from the date of refusal for listing by the stock exchange, or from the date of expiry of the

refund of the subscription money within the aforesaid fifteen days, the Company directors, in

ition to the issuer company, shall be collectively and severally liable for refund of the subscription money,


issuer Company, shall ensure due compliance of the above mentioned



SECTION (XXV): DESCRIPTION OF SECURITIES OUTSTANDING OR BEING OFFERED

(a) Dividend, voting and preemption rights;

The Share Capital of the company is divided into Ordinary Shares, carrying equal rights to vote and receive

dividend in terms of the relevant provisions of the Companies Act 1994 and the Articles of Association of

the company. All Shareholders shall have the usual voting rights in person or by proxy in connection with,

among others, election of Directors & Auditors and other usual agenda of General Meeting – Ordinary or

Extra-ordinary. On a show of hand, every shareholder presents in person and every duly authorized

representative of a shareholder present at a General Meeting shall have one vote and on a poll every

shareholder present or by proxy shall have one vote for every share held by him or her.

In case of any additional issue of shares for raising further capital the existing shareholders shall be

entitled to Right Issue of shares in terms of the guidelines issued by the BSEC from time to time.

(b) Conversion and liquidation rights;

In terms of provisions of the Companies Act 1994, Articles of Association of the Company and other

relevant rules in force, the shares of the Company are freely transferable. The Company shall not charge

any fee for registering transfer of shares. No transfer shall be made to a firm, an infant or person of

unsound mind.

(c) Dividend policy;

i. The profit of the Company, subject to any special right relating thereto created or authorized to be

created by the Memorandum and subject to the provisions of the Articles of Association, shall be

divisible among the members in proportion to the amount of capital paid-up on the shares held by

them respectively.

ii. No large dividend shall be declared than is recommended by the Directors, but the Company in its

General Meeting may declare a smaller dividend. The declaration of Directors as to the amount of Net

profit of the Company shall be conclusive.

iii. No dividend shall be payable except out of the profits of the Company or any other undistributed

profits. Dividend shall not carry interest as against the Company.

iv. The Directors may from time to time pay the members such interim dividend as in their judgment the

financial position of the Company may justify.

v. A transfer of shares shall not pass the right to any dividend declared thereon before the registration

of transfer.

vi. No limitation in payment of dividend is stipulated in any debt instrument or otherwise.

(d) Other rights of the securities holders;

In terms of the provisions of the Companies Act 1994, Articles of Association of the Company and other

relevant rules in force, the shares of the Company are transferable. The Company shall not charge any fee,

other than Government duties for registering transfer of shares. No transfer shall be made to a minor or

person of unsound mind.

The Directors shall present the financial statements as required under the law & International Accounting

Standard. Financial statements will be prepared in accordance with the International Accounting

Standards consistently applied throughout the subsequent periods and present with the objective of

providing maximum disclosure as par law and International Accounting Standard to the shareholders

regarding the financial and operational position of the company. The shareholders shall have the right to

receive all periodical statement and reports, audited as well as un audited, published by the company

from time to time.

The shareholder holding minimum of 10% shares of paid-up capital of the company shall have the right to

requisition extra ordinary General Meeting of the company as provided for the section 84 of the

Companies Act 1994.

SECTION (XXVI): FINANCIAL STATEMENTS

Independent Auditors' ReportTo the shareholders

of


We have audited the accompanying Financial Statements of Shepherd Industries Limited, Dhaka which

comprises the Statement of Financial Position as at 30 June 2016, Statement of Profit or Loss and Other

Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the period then

ended and other explanatory notes forming part of the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in

accordance with Bangladesh Financial Reporting Standards (BFRS)/ Bangladesh Accounting Standards, the

Companies Act 1994, Securities and Exchange Rules 1987 and other applicable laws and regulations. This

responsibility includes designing, implementing internal control relevant to the preparation of financial

statements that are free from material misstatement, whether due to fraud or error selecting and applying

appropriate accounting policies and making accounting estimates that reasonable in the circumstances.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our

audit in accordance with Bangladesh Standards on Auditing (BSA). Those standards require that we comply

with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the

financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the

financial statements. The procedures selected depend on the auditor's judgment, including the assessment of

the risks of material misstatement of the financial statements, whether due to fraud or error. In making those

risk assessments, the auditor considers internal control relevant to the entity's preparation and fair

presentation of the financial statements in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal

control. An audit also includes evaluating the appropriateness of accounting policies used and the

reasonableness of accounting estimates made by management, as well as evaluating the overall presentation

of the financial statements.

Basis of Opinion

We have conducted audit in accordance with Bangladesh Standards on Auditing (BSA) and accordingly we plan

and perform the audit to obtain reasonable assurance about whether the financial statements are free of

material misstatement. An audit includes examining on test basis evidence supporting the amounts and

disclosures in the financial statements. An audit also includes assessing the accounting principles used and

significant estimates made by management as well as evaluating the overall financial statement presentation.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our

audit opinion.

Opinion

In our opinion, the financial statements prepared in accordance with the Bangladesh Accounting Standards

(BAS) / Bangladesh Financial Reporting Standards (BFRS) present fairly, in all material respects, the financial

position of the company as at 30 June 2016 and the result of its operation and its cash flows for the period

then ended and comply with the Companies Act 1994, Securities and Exchange Rules 1987 and other

applicable laws and regulations.

We further report that:

a) we have obtained all the information and explanations which to the best of our knowledge and belief

were necessary for the purposes of our audit and made due verification thereof;

b) in our opinion, proper books of account as required by law have been kept by the company so far as it

appeared from our examination of these books;

c) the company's financial statements dealt with by the report are in agreement with the books of

account; and

d) the expenditure incurred was for the purpose of company's business.

Dated. Dhaka:

22 September 2016

Sd/-

MAHFEL HUQ & Co.



Statement of Financial Position

as on June 30, 2016

Notes Amount in

Taka

Amount in

Taka

Amount in

Taka

30.06.2016 31.03.2016 01.04.2015

ASSETS AND PROPERTIES Re-stated

Non-Current Assets 1,384,811,864 1,346,179,361 1,354,364,604

Property, Plant & Equipment 4 1,334,235,677 1,302,877,602 1,354,364,604

Capital Work-in-Progress 5 50,407,119 43,123,793 -

Intangible Asset 6 169,068 177,966 -

Current Assets 2,471,463,873 2,531,856,325 2,323,753,225

Inventories 7 1,184,165,958 1,380,280,441 1,268,250,601

Trade & other Receivables 8 1,091,466,500 937,947,151 659,502,234

Investment 9 62,232,899 62,232,899 36,592,718

Advance, Deposits & Prepayments 10 77,844,133 74,963,426 60,975,070

Current a/c with Related Entity 11 15,100,000 29,100,000 279,349,957

Cash and Cash Equivalents 12 40,654,383 47,332,408 19,082,645

3,856,275,737 3,878,035,686 3,678,117,829

EQUITY AND LIABILITIES

Shareholders' Equity 1,948,472,212 1,933,656,316 1,434,918,136

Share Capital 13 1,042,059,860 1,042,059,860 191,194,000

Share Money Deposit 14 - 33,728,933 476,927,129

Revaluation Reserve 15 552,651,670 554,262,515 609,128,159

Retained Earnings 16 353,760,682 303,605,008 157,668,848

Non-Current Liabilities 123,185,570 124,017,703 169,670,497

Long Term Foreign Loan - - 38,505,032

Obligation under Finance Lease 17 4,003,683 4,475,454 -

Deferred Tax liabilities 18 119,181,887 119,542,249 131,165,465

Current Liabilities 1,784,617,955 1,820,361,667 2,073,529,196

Loan from Shareholders' 19 33,728,933 - -

Trade & other Payables 20 968,869,108 1,043,939,623 867,628,960

Obligation under Finance Lease-Current

Portion

17 1,793,435 1,732,744 -

Short Term Bank Loan 21 652,665,292 637,766,832 1,110,873,232

Liabilities for Expenses & Provisions 22 127,561,187 136,922,468 95,027,004

3,856,275,737 3,878,035,686 3,678,117,829

Net Asset Value Per Share (With Revaluation

Reserve)

18.70 18.56 75.05

Net Asset Value Per Share (Without Revaluation

Reserve)

13.39 13.24 43.19

The annexed notes form an integral part of the Statement of Financial Position.



This is the Statement of Financial Position referred to in our separate report of even date.

Dated: Dhaka

Sd/-

MAHFEL HUQ & CO.

22 September 2016 Chartered Accountants

The annexed notes form an integral part of the Statement of Profit or Loss and Other Comprehensive Income.



This is the Statement of Profit & Loss and Comprehensive Income referred to in our separate report of even

date.

Dated: Dhaka

Sd/-

MAHFEL HUQ & CO.



Statement of Profit or Loss and Other Comprehensive Income

for the period from April 01 to June 30, 2016

Notes Amount in Taka Amount in

Taka

30.06.2016 30.06.2015

Revenue 23 756,861,925 750,786,410

Less: Cost of Sales 24 (669,410,501) (664,678,992)

Gross Profit 87,451,424 86,107,418

11.55% 11.47%

Foreign Currency Gain/(Loss) 25 (9,602,729) (913,448)

Add: Other income 26 12,466,474 1,312,711

Less: Operating Expenses (14,282,881) (9,511,702)

Selling & Distribution Expenses 27 (1,977,383) (975,556)

Administrative Expenses 28 (12,305,498) (8,536,146)

Profit before Financial Expenses & Tax 76,032,288 76,994,979

Less: Financial Expenses 29 (16,131,226) (35,276,513)

Net Profit/ (Loss) before tax 59,901,062 41,718,466

Income Tax Expense: (11,701,414) (1,316,736)

Current Tax 30 (11,716,595) (7,312,199)

Deferred Tax Income/(Expenses) 15,181 5,995,463

Net Profit/ (Loss) after Tax for the period 48,199,648 40,401,730

Basic Earning Per share (Par Value of Tk. 10/- each) 31 0.46 2.11

Re-stated Earning Per share (Par Value of Tk. 10/-

each)

31 0.46 0.64


Statement of Cash Flows

For the period from April 01 to June 30, 2016

Particulars Notes Amount in Taka Amount in Taka

30.06.2016 30.06.2015

A) Cash Flows from Operating Activities

Received from customers and others 32 599,748,935 458,697,047

Payment to Creditors, Suppliers, Employees and

Others

33 (586,950,452) (432,344,223)

Cash inflow/(outflow) from operation 12,798,483 26,352,824

Income Tax Paid 34 (4,226,203) (4,247,255)

Net cash provided by Operating Activities 8,572,280 22,105,569

B. Cash Flows from Investing Activities

Acquisition of Property, Plant & Equipments (24,149,832) (13,822,325)

Proceeds from Sale of Property, Plant & Equipments 600,000 -

Payment for Capital Work-in-Progress 35 (3,657,898) -

Investment in FDR - (6,411,981)

Investment in Share Money Deposit of Taiwan Food

and Processing Industries Limited

- (62,000,000)

Advance Lease Deposits - (414,220)

Net cash used in Investing Activities (27,207,730) (82,648,526)

C. Cash Flow from Financing Activities

Short Term Loan Received/(Paid)-Net 14,898,460 6,906,049

Obligation under Finance Lease Received/(Paid)-Net (411,080) 7,359,835

Financial Expenses Paid (16,131,226) (35,276,513)

Current a/c with Related Entity 14,000,000 151,841,548

Net cash provided by Financing Activities 12,356,154 130,830,919

D. Net Increase/(Decrease) in cash and Cash Equivalent (6,279,296) 70,287,962

E. Cash & Cash Equivalent at beginning at the period 47,332,408 19,082,645

F. Unrealized gain/(loss) (398,729) (97,250)

G. Cash & Cash Equivalent at the end of the period 40,654,383 89,273,357

Net Operating Cash Flow per Share 0.08 1.16

The annexed notes form an integral part of the Statement of Cash Flows



This is the Statement of Cash Flows referred to in our separate report of even date.

Dated: Dhaka

Sd/-

MAHFEL HUQ & CO.



192


Statement of Changes in Equity


Particulars Paid up Capital Share Money Deposit Revaluation

Reserve

Retained Earnings Total Equity

Opening balance 1,042,059,860 33,728,933 554,262,515 303,605,008 1,933,656,316

Less: Transfer to Loan from Shareholders (33,728,933) - - (33,728,933)

Less: Depreciation on revaluation transfer to retained earnings-net off tax - - (1,956,026) 1,956,026 -

Add/(Less): Deferred Tax Income/(Expenses) during the period - - 345,181 - 345,181

Add: Net profit/(loss) for the period - - - 48,199,648 48,199,648

Closing balance on 30 June 2016 1,042,059,860 - 552,651,670 353,760,682 1,948,472,212



Particulars Paid up Capital Share Money Deposit Revaluation

Reserve

Retained Earnings Total Equity

Opening balance 191,194,000 476,927,129 609,128,159 157,668,848 1,434,918,136

Prior year adjustment: -

Prior years' adjustment for excess transfer of depreciation from revaluation

reserve

8,430,037 (8,430,037) -

Prior years' adjustment for deferred tax on revaluation recognized in statement

of profit or loss and other comprehensive income

(56,432,237) 56,432,237 -

Retrospective adjustment for employees' gratuity fund for introduction of

Gratuity Policy

(23,970,636) (23,970,636)

Retrospective adjustment for recognition of Intangible Assets (17,770,413) (17,770,413)

Restated opening Balance 191,194,000 476,927,129 561,125,959 163,929,999 1,393,177,087

Less: Depreciation on revaluation transfer to retained earnings-net off tax (11,415,123) 11,415,123 -

Add/(Less): Deferred Tax Income/(Expenses) during the period 381,644 381,644

Add: Net profit (Loss) for the period 40,401,730 40,401,730

Closing Balance on 30 June 2015 191,194,000 476,927,129 550,092,480 215,746,852 1,433,960,461



This is the Statement of Changes in Equity referred to in our separate report of even date.

Dated: Dhaka

Sd/-

MAHFEL HUQ & CO.



193


Notes to the Financial Statements


1 About the Company

1.01 SHEPHERD INDUSTRIES LIMITED, a private limited company limited by shares incorporated with the

Registrar of Joint Stock Companies & Firms under the Companies Act 1994 on 21 August 2000 vide

registration No. C-41066(425)/2000. The registered office of the company is located at House # 24, Road

# 04, Sector # 04, Uttara Model Town, Dhaka-1230, Bangladesh. The Industrial unit is located at Kathalia,

Bhaluka, Mymensingh. The company converted into public limited company with effect from June 08,

2015. The commercial production of the company was commenced on 18 October 2001.

Under a scheme of amalgamation passed by the Honorable High Court Division dated December 15,

2014, Shepherd Yarn Limited ( incorporated in 2005) has been amalgamated with Shepherd Industries

Ltd with effect from April 01, 2015.

1.02 Nature of Business Activities

Shepherd Industries limited is a 100% export oriented company engaged in dyeing of different counts of

yarn and market the processed yarn as deemed exporter.

2 Significant Accounting Policy for the presentation of the financial Statements

The specific accounting policies selected and applied by the company’s management for significant

transactions and events that have material effect within the framework of BAS-1 “Presentation of

Financial Statements”, in preparation and presentation of financial statements have been consistently

applied throughout the period and were also consistent with those used in earlier years.

2.01 Corporate Financial Statements

This comprises Statement of Financial Position, Statement of Profit or Loss and other Comprehensive

Income, Statement of Changes in Equity, Statement of Cash Flow and explanatory notes covering

accounting policies. This is prepared under the historical cost convention and in accordance with the

requirements of the Companies Act, 1994 and the Bangladesh Accounting Standards (BASs), Bangladesh

Financial Reporting Standards (BFRS) as applicable to this Company. The Board of Directors is

responsible for preparing and presenting the financial statements including adequate disclosures, which

approved and authorized for issue of this financial statements.

2.02 The financial statements are presented in accordance with guidelines provided by BAS 1 : Presentation

of Financial Statements

The financial statements comprises the following;

• Statement of Financial Position as on June 30, 2016

• Statement of Profit or Loss and other Comprehensive Income for the period ended on June 30, 2016

• Statement of Change in Equity for the period ended on June 30, 2016

• Statement of Cash Flows for the period ended on June 30, 2016

• Accounting Policies and explanatory notes to the Financial Statements for the period ended on June

30, 2016

2.03 Functional and presentation currency

The Financial Statements are prepared and presented in Bangladeshi Currency (Taka), which is the

functional currency of the company. All financial information presented has been rounded off to the

nearest Taka except where indicated otherwise.

2.04 Comparative Information

Comparative information has been disclosed in respect of the previous period for all numerical

information in the financial statements and also the narrative and descriptive information when it is

relevant for understanding of the current period financial statements.

Previous period figure has been re-arranged/re-stated whenever considered necessary to ensure

comparability with the current period presentation as per BAS-8: Accounting Policies, Changes in

Accounting Estimates and Errors. During the period adjustment has been made as per note # 36

2.05 Going Concern

The company has adequate resources to continue in operation for the foreseeable future. For this reasons

the directors continue to adopt going concern assumption in preparing the Financial Statement. The

current credit facilities and resources of the company provides sufficient fund to meet the present

requirements of its existing business.

2.06 Foreign Currency Transaction:

Foreign currency transactions are recorded, on initial recognition in the functional currency at the spot

exchange rate ruling at the transaction date.

At the end of each reporting period, in compliance with the provision of BAS 21: The Effects of Changes in

Foreign Exchange Rates, are determined as under :

(a) Foreign currency monetary items are translated using the closing rate.

(b) Non-monetary items that are measured in terms of historical costs in a foreign currency are

translated using the exchange rate at the date of the transaction.

(c) Non-monetary items that are measured at fair value in a foreign currency is translated using the

exchange rate at the date when the fair value is determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at rate

different from those at which they were translated on initial recognition during the period or in previous

financial statements is recognized in profit or loss in the period in which they arise.

2.07 Reporting Period

The financial statements covers three months from April 01, 2016 to June 30, 2016.

2.08 Authorization for issue

The Financial Statements have been authorized for issue by the board of directors on 22 September 2016.

2.09 Fundamental Accounting Concepts/ Assumption

The financial statements have been prepared under historical cost convention on accrual basis and such

other convention as required by BFRS for fair presentation of financial statements.

2.10 Use of estimates and judgments

The preparation of financial statements requires management to make judgments, estimates and

assumptions that affect the reported value of assets, liabilities, income and expenses . The estimates and

associated assumptions are based on historical experience and various other factors that are believed to

be reasonable under the circumstances, the result of which forms the basis of making the judgments

about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual

results may differ from these estimates. However, the estimates and underlying assumptions are revised

when there is material impact on the financial results of the company.

Due to the inherent uncertainty involved in making estimates, actual result could differ from those

estimates.

2.11 Regulatory Compliance

The financial Statements have been prepared in compliance with the following laws and regulations;

The Companies Act, 1994

The Bangladesh Securities and Exchange Rule 1987

The Bangladesh Securities and Exchange Commission Act 1993.

The Income Tax Ordinance, 1984

The Income Tax Rules, 1984

The Value Added Tax (VAT) Act, 1991

The Custom Act 1969

2.12 Compliance with BAS & BFRS

The following BAS have been applied in preparation of the financial statements for the period under

review:

BAS 1 Presentation of Financial Statements

BAS 2 Inventories

BAS 7 Statement of Cash Flows

BAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.

BAS 10 Events after the Reporting Period

BAS 12 Income Taxes

BAS 16 Property, Plant and Equipment

BAS 17 Leases

BAS 18 Revenues

BAS 19 Employee Benefits

BAS 21 The Effects of Changes in Foreign Exchange Rates

BAS 23 Borrowing Cost

BAS 24 Related Party Disclosures

BAS 32 Financial Instruments : Presentation

BAS 33 Earnings Per Share

BAS 34 Interim Financial Reporting

BAS 36 Impairment of Assets

BAS 37 Provisions, Contingent Liabilities and Contingent Assets

BAS 38 Intangible Assets

BAS 39 Financial Instruments : Recognition and Measurement

BAS 40 Investment Property

The following BFRS is applicable to the financial statements for the period under review;

BFRS 1 First-time adoption of Bangladesh Financial Reporting Standards

BFRS 3 Business Combinations

BFRS 7 Financial Instruments : Disclosures

2.13 Events after the Reporting Period

In compliance with the requirements of BAS 10: Adjusting Events after the reporting period, "Post Balance

Events" that provide additional information about the company's position at the balance date are

reflected in the financial statements and events after the balance sheet date that are not adjusting events

are disclosed in the notes when material.

The management of the company has withdrawn the investment of Tk. 6.20 crore in Taiwan Food and

Processing Industries Limited on 21 September 2016 as decided the Board.

2.14 Recognition and Measurement of Tangible Fixed Assets

Tangible assets have been stated at written down value. Accumulated historical cost and depreciation

have been shown in the Financial Statements. The cost of acquisition comprises of purchase price,

including import duties and non-refundable Taxes and any directly attributable cost of bringing the assets

to its state of intended use. Expenditure incurred after the assets have been put into operation, such as

repairs and maintenance is normally charged off as revenue expenditure in the period in which it is

incurred. In situation where it can be clearly demonstrated that the expenditure has resulted in an

increase in the future economic benefit expected to be obtained from the use of the fixed assets, the

expenditure is capitalized as an addition to cost of the assets.

2.15 Revaluation of Property, Plant & Equipment (PPE)

PPE have been stated at revalued amounts in accordance with BAS : 16 Property , Plant & Equipment.

i) Effective date of revaluation to the Financial Statements 31-12-2010 and 31-12-2011 respectively.

ii) PPE has been revalued by Mridha and Associates an independent valuer.

iii) Revaluation surplus has been transferred to Revaluation Reserve and distribution of such surplus to the

shareholders is restricted.

2.16 Depreciation of Tangible Fixed Assets

Depreciation on Property, Plant & Equipment other than Land & Land Development have been computed

during the year using the reducing balance method so as to write off the assets over their expected useful

life. Depreciation has been charged on addition when the related property, plant & equipments are ready

for use as per management intention.

After considering the useful life of assets as per BAS-16, the annual depreciation rates have been applied

as under which is considered reasonable by the management;

Rate (%)

Building - Factory

10%

Land & Land Development

0%

Plant & Machinery

10%

ETP

15%

Electric Equipment & Line Installation 10%

Fire Fighting Equipment

10%

Tools & Equipments

20%

Gas Line Installation

10%

Building - Head Office

5%

Office Equipment

10%

Air Conditioner & Electric Appliance 10%

Lift - Head Office, Uttara

10%

Furniture & Fixture

10%

Office Decoration

10%

Car & Vehicles

15%

Telephone Equipments 10%

2.17 Impairment of assets

I) Financial Assets

Accounts receivable and others receivables are assessed at each reporting date to determine whether

there is any objective evidence of impairment. Financial assets are impaired if objective indicates that a

loss event has occurred after the initial recognition of the asset and that the loss event had a negative

effect on the estimated future cash flows of that asset that can be estimated reliably. Objective evidence

that financial assets are impaired can include default of delinquency by a debtor, indicates that a debtor of

issuer will enter bankruptcy etc.

II) Non-Financial assets

An asset is impaired when its carrying amount exceeds its recoverable amount. The company assesses at

each reporting date whether there is any indication that an asset may be impaired. If any such indication

exits, the company estimates the recoverable amount of the asset. The recoverable amount of an asset is

the higher of its fair value less cost to sell and its value in use. Carrying amount of the assets is reduced to

its recoverable amount by recognizing an impaired loss is recognized immediately in statement of

comprehensive income unless the asset is carried at revalued amount. Any impaired loss of a revalued

asset treated as a revaluation decrease. During the period no impaired loss occurred to recognize in the

Financial Statements.

2.18 Inventories

Inventories are measured at the lower of cost and net realizable value as prescribed by BAS-2. The cost of

inventories is based on the FIFO method, and includes expenditure incurred in acquiring the inventories,

production or conversion costs and other costs incurred in bringing them to their existing location and

condition. In the Case of manufactured inventories and work-in-progress, cost includes an appropriate

allocation of production overheads based on normal operation capacity.

2.19 Trade and Other Receivables

Trade receivables are carried at original invoice amount less an estimate made for doubtful debts based on

a review of all outstanding amounts at the year end. All the receivables are fully secured by LC. However, a

provision for doubtful debt of Tk. 4,222,845 has been provided in the Financial Statements as described in

note # 8

2.20 Cash & Cash Equivalents

According to BAS 7 'Statement of Cash Flows ' cash comprises of cash in hand, demand deposits and Cash

equivalents which are short term highly liquid investments that are readily convertible to Cash and which

are subject to an insignificant risk of changes in value. BAS 1 "Presentation of Financial Statements''

provides that Cash & Cash Equivalents are not restricted in use. Considering the provision of BAS 7 & BAS

1, Cash in Hand & Bank Balances have been treated as Cash & Cash Equivalents.

2.21 Income Tax

a) Current Tax: Provision for income tax has been made @ 15% on net profit before tax of the company

except other income as per Income Tax Ordinance 1984. However provision @ 35% has been made on

other income of the company.

b) Deferred tax: Deferred tax liabilities are the amount of income taxes payable in future years in respect of

taxable temporary differences. Deferred tax assets are the amount of income taxes recoverable in future

years in respect of deductible temporary differences. Deferred tax assets and liabilities are recognized for

the future tax consequences of timing differences arising between the carrying values of assets, liabilities,

income and expenditure and their respective tax bases. Deferred tax assets and liabilities are measured

using tax rates and tax laws that have been enacted or subsequently enacted at the financial statement

date.

During the year ended 31 March 2016, as the tax provision is being at actual and deducted at source under

section 53BBBB as final settlement as per section 82( c) (2)(kk) of ITO 1984, no deferred tax asset or

liabilities except deferred tax on revaluation reserve were recognized in the financial statements and

deferred tax recognized prior to that year was reversed accordingly.

During the period section 82(c) has been changed by the Finance Act 2016 from final settlement to

minimum tax for which tax deducted at source shall not be considered as final settlement of tax liability

rather shall be treated as minimum tax payable. Thus deferred tax has been recognized in the financial

statements and retrospective effect has been given accordingly as per requirement of BAS-8: "Accounting

policies, Changes in Accounting Estimates and Errors."

2.22 Leased Assets

In compliance with BAS 17, Lease in terms of which the company assumes substantially all the risks and

rewards of ownership are classified as finance leases and all other leases are classified as operating lease.

Upon initial recognition, the lease assets is measured at an amount equal to the lower of its fair value and

the present value of the minimum lease payment. Subsequent to initial recognition , the assets is

accounted for in accordance with accounting policy applicable to the assets.

2.23 Revenue Recognition

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable,

net of returns, trade discounts as per BAS-18. Revenue is recognized when the significant risks and reward

of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated

costs and possible return of goods can be estimated reliably & there is no continuing management

involvement with the goods sold. Transfer of risk and rewards occurs for the sale of goods when the

product is delivered.

2.24 Employee Benefits

The company maintains Contributory Provident Fund and Gratuity for its eligible permanent employees.

The eligibility is determined according to the terms and conditions set forth in the respective

agreements/trust deeds. The company has accounted for and disclosed employee benefits in compliance

with the previsions of BAS 19 , Employee Benefits. The cost of employee benefit is charged off as revenue

expenditure in the period to which the contributions relate.

The company got recognition from Commissioner of Taxes its provident fund scheme (Defined

Contribution Plan) vide order no: bw_ bs - 4G-28/KA-2/Avmv/cÖwf‡W›U dvÛ/2014-2015/1308(3) ZvwiL t 27/05/2015

wLªt for employees of the company eligible to be members of the fund in accordance with the rules of the

provident fund constituted under an irrevocable trust. All permanent employees contribute to the

provident fund and the company also makes equal contribution.

The company got recognition from National Board of Revenue its gratuity fund vide order no: bw_ bs -

08.01.0000.035.02.0016.2015/178 ZvwiL t 01/07/2015 wLªt for employees of the company eligible to be

members of the fund in accordance with the rules of the gratuity fund constituted under an irrevocable

trust.

2.25 Borrowing Cost

Interest and other cost incurred by the company in connection with the borrowing of fund are recognized

as expenses in the year in which they are incurred unless such borrowing cost related to acquisition

/construction of assets in progress that are capitalized as per BAS 23 , "Borrowing Cost''.

2.26 Financial expenses

Finance expenses comprise interest expenses on bank loan and other borrowings. All borrowing cost is

recognized in the statement of profit or loss & other comprehensive income based on the statement

received from Financial Institutions.

2.27 Statement of Cash Flows

Statement of Cash Flows have been prepared principally in accordance with BAS-7 “Statement of Cash

Flows” and the cash flows from the operating activities have been presented under direct method.

2.28 Earnings Per Share (EPS)

This has been calculated in compliance with the requirement of BAS-33 : Earnings per share by dividing the

net earnings after Tax by the weighted average number of ordinary shares outstanding during the period .

Basic Earnings per share (Numerator /Denominator )

Earnings (Numerator)

*This represents earning for the period attributable to ordinary shareholders

No. of ordinary shares (Denominator)

This represents weighted average number of ordinary share outstanding during the period.

Diluted Earnings per share

As per the existing conditions of the loans taken by the company from various financial institutions or

other contracts with various parties including employees, there is no condition related to conversion or

stipulation related to share based payments for material and services supplied by them to the company.

Hence , Diluted EPS of the company is same as basic EPS.

2.29 Provisions

In accordance with the guidelines as prescribed by BAS-37: Provisions, Contingent Liabilities and

Contingent Assets, provisions are recognized in the following situations;

a. when the company has an obligation ( legal or constructive) as a result of past events;

b. when it is probable that an outflow of resources embodying economic benefits will be required to settle

the obligation; and

c. Reliable estimates can be made of the amount of the obligation.

The company made provisions for doubtful debts against the disputed amount due from New Horizon (BD)

Ltd under money suit (Note no.8).

2.30 Contingent Liabilities and Contingents Assets

Contingent Liabilities and Contingents Assets are present or possible obligations on liabilities or assets ,

arising from past events and existence of which depends upon the occurrence or non-occurrence of one or

more uncertain future events which are not within the control of the company or which amount of the

obligations cannot be measured with sufficient reliability in accordance with BAS-37 .

During the period there was no such assets or liabilities.

2.31 Intangible Assets

In Compliance with the requirements of BAS, 38 Intangible Assets

'

The following terms are used in this Standard with the meanings specified:

Amortization is the systematic allocation of the depreciable amount of an intangible asset over its useful

life.

An asset is a resource:

(a) controlled by an entity as a result as past events; and

(b) From which future economic benefits are expected to flow to the entity.

Intangible assets are being written off @20% on reducing balance method

2.32 Financial Instrument

A financial instrument in any contract that gives rise to financial assets and a financial liability or equity

instrument of another entity.

Financial assets:

Financial assets of the company include cash and cash equivalents, Trade and other receivables and equity

instrument of another entity. The company initially recognized receivable on the date they are originated.

All other financial assets are recognized initially on the date at which the company becomes a party to the

contractual provision of the transaction. The company derecognizes a financial asset when, and only when

the contractual rights or probabilities of receiving the cash flows on the financial assets in a transaction in

which substantially all the risk and rewards of ownership of the financial assets are transferred.

Financial liability:

Financial liabilities are recognized initially on the transaction date at which the company becomes a party

to the contractual provisions of the liability. The company derecognizes the financial liabilities when its

contractual obligations are discharged or cancelled or expired or no more exist. Financial liabilities includes

payable for expense, liability for capital expenditure and other current liabilities.

2.33 Related Party Disclosures

The Company in normal course of business carried out a number of transactions with directors/entities

that fall within the definition of related party contained in Bangladesh Accounting Standard 24: Related

Party Disclosures. The disclosure relating to related parties have been shown in note # 36.

2.34 Business Combinations

An entity shall account for each business combination by applying the acquisition method;

Applying the acquisition method requires:

(a) identifying the acquirer

(b) determining the acquisition date

(c ) recognizing and measuring the identifiable assets acquired, the liabilities assumed and any non

controlling interest in the acquiree; and

(d ) recognizing and measuring goodwill or a gain from a bargain purchase

The acquirer shall identify the acquisition date, which is the date on which it obtains control of the

acquiree.

Under a scheme of amalgamation sanctioned by the Honorable High Court dated December 15, 2014

Shepherd Yarn Ltd has been amalgamated with Shepherd Industries Ltd with effect from April 01, 2015

under the title "Shepherd Industries Ltd".

2.35 Investment Property

For Investment Property, the company follows fair value model as subsequent measurement. A gain or

loss arising from a change in the fair value of investment property is recognized in Statement of Profit or

loss for the year in which it arises.

3 Risk exposure

3.01 Interest rate risk

Interest rate risk is the risk that Company faces due to unfavorable movements in the interest rates.

Changes in the government’s monetary policy, along with increased demand for loans/ investments tend

to increase the interest rates. Such rises in interest rates mostly affect companies having floating rate

loans or companies investing in debt securities.

Management perception

The Company maintains low debt/ equity ratio and accordingly, adverse impact of interest rate fluctuation

is insignificant. Considering the global economy and inflection of overseas financing, financial institutions

in Bangladesh reducing lending rate creating an opportunity for saving in financial cost.

3.02 Exchange rate risk

Exchange rate risk occurs due to changes in exchange rates. As the Company imports materials and

equipment from abroad and also earns revenue in foreign currency, unfavorable volatility or currency

fluctuation may affect the profitability of the Company. If exchange rate increases against local currency,

opportunity arises for generating more profit.


The company purchase raw materials and sells finished product mostly in US$ currency and the

transaction would settle within very short period. Therefore, volatility of exchange rate will have no impact

on profitability of the Company.

3.03 Industry risks

Industry risk refers to the risk of increased competition from foreign and domestic sources leading to

lower prices, revenues, profit margin, and market share which could have an adverse impact on the

business, financial condition and results of operation.


Management is optimistic about growth opportunity in textile sector in Bangladesh. Furthermore there is

untapped international market.

3.04 Market risks

Market risk refers to the risk of adverse market conditions affecting the sales and profitability of the

company. Mostly, the risk arises from falling demand for the product or service which would harm the

performance of the company. On the other hand, strong marketing and brand management would help

the company increase their customer base.


Management is fully aware of the market risk and act accordingly. Market for textile products in

Bangladesh is growing at an exponential rate. Moreover the company has a strong marketing and brand

management to increase the customer base and customer loyalty.

3.05 Operational risks

Non-availabilities of materials/equipment/services may affect the smooth operational activities of The

Company. On the other hand, the equipment may face operational and mechanical failures due to natural

disasters, terrorist attacks, unforeseen events, lack of supervision and negligence, leading to severe

accidents and losses.


The company perceives that allocation of its resources properly can reduce this risk factor to great extent.

The Company hedges such risks and also takes preventive measures therefore.

3.06 Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on

time or at a reasonable price.


The Company's approach to managing liquidity is to ensure, as far as possible, that it will always have

sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without

incurring unacceptable losses or risking damage to the Company's reputation. Typically, management

ensures that it has sufficient cash and cash equivalent to meet expected operational expenses, including

the servicing of financial obligation through preparation of the cash forecast, prepared based on time line

of payment of the financial obligation and accordingly arrange for sufficient liquidity/fund to make the

expected payment within due date.


30.06.2016 31.03.2016

4 Property, Plant & Equipment

A. Cost

Opening balance 1,808,295,374 1,807,952,324

Add: Purchase/ cinstructed during the period/year 33,064,832 26,614,290

Add: Transfer from Capital Work-in-Progress 12,000,000 -

Less: Disposal made during the period/year (2,241,996) (26,271,240)

1,851,118,210 1,808,295,374

B. Accumulated Depreciation

Opening balance 505,417,772 453,810,178

Add: Charged during the period/year 12,891,947 49,459,443

Add: Correction for under charged

depreciation

- 2,737,695

Less : Adjustments made during the

period/year

(1,427,186) (589,544)

Accumulated Depreciation Restated 516,882,533 505,417,772

Written Down Value (A - B) 1,334,235,677 1,302,877,602

The PPE includes one leased Car which have been recognized as per BAS 17. A detailed schedule on

Property, Plant and Equipment has been given in Annexure - A

5 Capital Work-in-Progress

Building-Factory 12,000,000

12,000,000

Plant & Machineries 50,407,119

31,123,793

62,407,119

43,123,793

Less: Transfer to Property, Plant &

Equipments

12,000,000

-

50,407,119

43,123,793

The above represents the amount paid against imported machineries which is not installed as on the

reporting date. These amount shall be transferred to Property, Plant & Equipments when the installation

of machineries will be completed and ready for use as per management's intention.

6 Intangible Asset

Software and Software Development 177,966 222,458

Less: Write off 20% (8,898) (44,492)

Written Down Value 169,068 177,966

7 Inventories

Raw Materials 885,778,015 1,079,455,235

Dyes & Chemical 180,962,892 182,518,968

Work-in-Process 25,369,907 24,190,990

Finished Goods 76,105,239 81,031,479

Packing Materials 5,428,062 5,184,031

Stores & Spares 10,521,843 7,899,738

1,184,165,958 1,380,280,441

Details has been shown in Annexure-B

8 Trade & other Receivables

This has been arrived as under;

Accounts receivable 1,091,246,714 937,767,678

Other Receivable 219,786 179,473

1,091,466,500 937,947,151

A detailed schedule of Accounts and Other Receivables is given in Annexure - C

The company has pending suits against receivables to be received from New Horizon (BD) Ltd for the

outstanding amount following money suits in the court of 2nd

District Judge, Dhaka, Money Suit No. 16 of

2013 and still waiting for judgment by the Ld Court for which a provision for doubtful debts of Tk.

42,22,845/ has already been provided in the financial statements for the year ended 31 March 2016.

Classification schedule as required by Schedule XI of Companies Act 1994 is as follows:

i) Accounts Receivable considered good in respect

of which the company is fully secured

1,091,246,714 937,767,678

ii) Accounts Receivable considered good in respect

of which the company holds no security other than

the debtor's personal security

219,786 179,473

iii) Accounts Receivable considered doubtful or bad 4,222,845 4,222,845

iv) Accounts Receivable due by any director or

other officer of the company

- -

v) Accounts Receivable due by Common

management

- -

vi) The maximum amount of receivable due by any

director or other officer of the company

- -

1,095,689,345 942,169,996

Less: Provision for doubtful debt 4,222,845 4,222,845

1,091,466,500 937,947,151

The aging of accounts and other receivables as follows:

Accounts

receivable

Other Receivable Total Total

Within Three Months 756,861,925 219,786 757,081,711 803,682,845

Three to Six Months 334,384,789 - 334,384,789 122,869,881

More than Six

Months

- - 11,394,425

1,091,246,714 219,786 1,091,466,500 937,947,151

9 Investment

This has been

arrived as under;

Investment in FDR 232,899 232,899

Investment in Taiwan Food & Processing Industries Ltd. 62,000,000 62,000,000

62,232,899 62,232,899

Investment of Tk. 6,20,00,000 in Share Money Deposit of Taiwan Food & Processing Industries Ltd. which

has been withdrawn by the company on 21 September 2016 as disclosed in note # 2.13 : Events after the

Reporting Period.

10 Advance, Deposits & Prepayments

The Break-up of the Amount is given

below:

Advances 68,527,471 62,200,354

Deposits 9,316,662 12,763,072

77,844,133 74,963,426

A detailed schedule of advance, deposit & prepayment is shown in Annexure -D

11 Current Accounts with Related Entity


Party Wise break down given below:

Shepherd Textile (BD.) Limited 15,100,000 29,100,000

15,100,000 29,100,000

This amount represents the balance inter company transaction under the common management.

12 Cash and Cash Equivalents

The Break-up of the Amount is given below:

Cash in Hand 525,665 2,076,692

Cash at Bank (Note: 12.1) 40,128,718 45,255,716

40,654,383 47,332,408

12.1 Cash at Bank

Bank Name & Account Number

Agrani Bank CD-2227 - 526

Al-Arafah Islami Bank CD # 0171020062933 1,475 2,050

Bank Alfalah CD-070201701321 28,845 28,845

Bank Alfalah CD-070201701323 118,327 118,327

Bank Asia # 0563300338 179,719 180,294

City Bank CD A/C- 1101471199001 32,523 32,868

Dhaka Bank CD A/C# 0212100000003142 18,029 18,604

IFIC Bank CD # 1002-753374-001 - 458

IFIC Bank CD # 1002-535257001 1,150,392 89,199

Southeast Bank FBPA/C # 0060 1,587

Bangladesh Krishi Bank CD-509 1,968 2,543

National Bank A/C. # 0043-33017514 49,240 1,366,918

National Bank#33004091 361,142 363,562

National Bank-CD-272 ( Bhaluka) 32,624 9,650

IFIC A/C # 1002-535257-836 (USD A/c) 518,814 1,008,067

NBL FC A/C-0043-84004808 (USD A/c) 160,119 676,984

NBL- FCBPAR # 004342000069 (USD A/c) - 270,950

Southeast Bank # 15500000371 (USD A/c) 13,252,672 21,932,165

Southeast Bank # 15500000360 (USD A/c) - 2,117

Trust Bank A/C # 5025000416 (USD A/c) 21,510,643 17,329,850

Pubali Bank CD # 4465901009224 1,371,928 -

NBL-FBAR ( Taka A/c) - 25,531

NCCBL CD # 0012-0210001626 - 38,022

Sonali Bank # 11069 12,028 12,603

Sonali Bank-Bhaluka Br- 3005442 15,698 15,698

Southeast Bank # 11100012503 53,118 86,181

Southeast Bank CD# 111-17190 292,254 837,387

Trust Bank CD # 0210010201 47,997 49,147

Trust Bank CD # 9820 894,266 733,285

Woori Bank A/C # CD-2820 23,310 23,885

40,128,718 45,255,716

13 Share Capital

Authorized Capital:

190,000,000 ordinary shares of Tk. 10/- each 1,900,000,000 1,900,000,000

Paid up Capital:

104,205,986 ordinary shares @ Tk.10/- each 1,042,059,860 1,042,059,860

The present shareholding position of the company has been shown in Annexure: E

14 Share Money Deposit


Opening Balance 33,728,933 476,927,129

Add: Share Money deposit during the period - 40,144

Less: Share Allotted during the year - (443,238,340)

Less: Transfer to Loan from Shareholders' (33,728,933)

- 33,728,933

The balance of the share money deposit has been transferred to loan from shareholders as per decision

of the Board.

15 Revaluation Reserve


Opening Balance 554,262,515 609,128,159

Add: Prior years' adjustment for excess transfer of

depreciation to retained earnings

- 8,430,037

Less: Prior years' adjustment for deferred tax on

revaluation recognized in statement of profit or loss

and other comprehensive income

- (56,432,237)

Re-stated opening balance 554,262,515 561,125,959

Less: Depreciation on revaluation transfer to

retained earnings-net off tax

(1,956,026) (8,334,181)

Add/(Less): Deferred Tax Income/(Expenses)

during the period

345,181 1,470,737

552,651,670 554,262,515

16 Retained Earnings


Opening balance 303,605,008 157,668,848

Less: Prior years' adjustment for excess transfer

of depreciation from revaluation reserve

- (8,430,037)

Add: Prior years' adjustment for deferred tax on

revaluation recognized in statement of profit or

loss and other comprehensive income

- 56,432,237

Less: Retrospective adjustment for employees'

gratuity fund for introduction of Gratuity Policy

- (23,970,636)

Less: Retrospective adjustment for recognition of

Intangible Assets

- (17,770,413)

Re-stated opening balance 303,605,008 163,929,999

Add: Net profit (Loss) for the period 48,199,648 131,340,828

Add: Depreciation transfer from revaluation

reserve

1,956,026 8,334,181

353,760,682 303,605,008

17 Obligation under finance lease

This consist of the following;

Lease Liability-IDLC 5,797,118 6,208,198

Less: Current portion 1,793,435 1,732,744

Non-Current portion 4,003,683 4,475,454

Aging Schedule for lease finance

Within One year 1,793,435 1,732,744

One year to Four years 4,003,683 4,475,454

5,797,118 6,208,198

Nature: Lease Finance

Purpose: Acquisition of vehicle

Tenure: 4 years

Repayment: 48 monthly equal installment @ Tk.2,07,110

Rate of Interest: 13.85%

Security: Security deposit Tk.4,14,220 equivalent 2 monthly installments

18 Deferred Tax liabilities


Opening Balance 119,542,249 131,165,465

Add/(Less): Deferred Tax Expenses/(Income) recognized in

Statement of Profit or Loss and other comprehensive income

(15,181) (10,152,479)

Add/(Less): Deferred Tax Expenses/(Income) recognized directly

in Statement of Changes in Equity

(345,181) (1,470,737)

119,181,887 119,542,249

The details have been shown in Annexure-F

19 Loan from Shareholders'


Opening Balance - -

Add: Transfer from Share Money Deposit 33,728,933 -

33,728,933 -

The above has been transferred from share money deposit as per decision of the Board and shall be

payable to the following shareholders':

Mr. Kao Wen Fu 10,554,794 -

Ever Priority Limited 18,786,859 -

Mr. Chen Che Seng 6,597 -

Eternal Flame Int'l Co. Inc. 4,351,405 -

Mr. Chung Wen kuei 29,278 -

33,728,933 -

20 Trade & Other Payables


Trade Payable 949,384,564 1,022,104,937

Other Payable 19,484,544 21,834,686

968,869,108 1,043,939,623

All the trade payables disclosed here are arisen from purchasing yarn, dyes & chemical, packing materials etc.

from both foreign & local suppliers.

A detailed schedule of Trade and other payables is shown in Annexure -G

Ageing Schedule: Trade Payable Other Payable Total Total

Within Three Months 375,688,503 13,892,357 389,580,860 695,573,973

Three months to six months 556,684,254 2,301,436 558,985,690 311,713,225

More than six months 17,011,807 3,290,751 20,302,558 36,652,425

949,384,564 19,484,544 968,869,108 1,043,939,623

21 Short Term Bank Loan

This consist of the following;

Demand Loan IFIC Bank Limited 143,171,891 164,453,024

LDBP Loan IFIC Bank Limited 124,423,101 109,387,501

LDBP Loan Southeast Bank Limited 119,338,454 121,578,149

LDBP Loan Trust Bank Limited 169,370,800 82,889,300

SOD - IFIC Bank IFIC Bank Limited 48,661,724 48,035,569

SOD-Southeast Bank Southeast Bank Limited 30,929,053 30,887,498

Loan Against Trust Receipts Southeast Bank Limited 16,770,269 18,269,445

Time Loan Southeast Bank Limited - 44,368,105

Time Loan Trust Bank Limited - 17,898,241

652,665,292 637,766,832

Nature: Short term loan

Purpose: Working capital

Tenure: One year

Repayment: From Export Proceed

Rate of Interest: 13% to 17.50%

Security: Mortgage of 432 Decimals of land with factory premises, 655.75

decimals at Bhaluka and 673 decimals land with two pre-fabricated

and three semi pacca building, Post dated cheque, Hypothecation of

machineries, raw materials, work in process & finished goods duly

insured covering the risk of fire and personal guarantee of all

directors.

22 Liabilities for Expenses & provisions This consist of the following; Salary & Allowance-Payable 915,279 8,017,012

Tax Deduction at Source 2,276,479 2,540,275

Gas, Electric Bill & Internet Bill Payable 14,426,933

16,435,047

Audit & Professional Fees Payable 517,500 402,500

Employees CPF Payable 256,494 710,524

Interest Payable - Foreign Loan - 11,625,225

Provision for Employees' Gratuity Fund 26,720,846

26,460,824

Provision for Income Tax Note-22.01 82,447,656 70,731,061

127,561,187 136,922,468

22.01 Provision for Income Tax

Opening Balance 70,731,061 48,691,500

Add: Provided during the period/year 11,716,595 26,010,545

82,447,656 74,702,045

Less: Paid during the period/year - (3,970,984)

Less: Adjusted during the period/year - -

82,447,656 70,731,061

23 Revenue

Export Sales (Deemed): Qty in Lbs

Dyed Yarn 4,142,680 756,861,925 750,786,410

756,861,925 750,786,410

24 Cost of Sales


Work in process (opening) 24,190,990 26,193,712

Add: Raw Material Consumed Note-24.1 594,754,899 643,010,365

Add: Factory Overhead Note-24.2 70,908,279 53,445,668

Less: Work in Process (Closing) (25,369,907) (24,527,277)

Cost of Production 664,484,261 698,122,468

Add: Finished Goods (Opening) 81,031,479 46,195,204

Finished Goods Available for sale 745,515,740 744,317,672

Less: Finished Goods (Closing) (76,105,239) (79,638,680)

Cost of Sales 669,410,501 664,678,992

24.1 Raw Material Consumed

Opening Stock 1,267,158,234 1,195,861,685

Raw Materials 1,079,455,235 1,002,791,041

Dyes & Chemicals 182,518,968 183,154,837


Add: Cost of Materials Purchased 399,765,634 600,082,675

Raw materials 288,634,367 488,364,804

Dyes & chemicals 100,968,791 100,062,121

Packing materials 6,688,045 4,457,436

Carrying inward 1,993,224 4,149,700

Insurance 675,047 1,263,789

Clearing & forwarding expenses 806,160 1,784,825

Raw Materials available for Consumption 1,666,923,868 1,795,944,360

Less : Closing Stock 1,072,168,969 1,152,933,995

Raw Materials 885,778,015 969,715,899

Dyes & Chemicals 180,962,892 179,035,518


Raw Materials Consumed 594,754,899 643,010,365

24.2 Factory Overheads


Ansar Guard Expenses 15,600 15,000

Conveyance 107,617 91,180

Contribution to Gratuity Fund 562,174 562,174

Contribution to Provident Fund 72,603 -

Crockeries & Cutleries 16,888 11,983

Depreciation 11,166,392 11,759,112

Electricity Bill 78,366 153,029

ETP Expenses 245,040 88,871

Fire Fighting Expenses 50,690 420

Forms, Stamps, Documents etc. 21,036 16,820

Fuel, Oil & Lubricants 385,760 341,500

Gas Bill 29,968,129 18,817,555

Gas Bill-Factory Residence 9,915 12,695

Hangs, Twisting & Winding Expenses 175,976 172,114

Loading & Unloading Charge 152,807 361,618

Medical Expenses 21,627 22,065

Printing- Factory 139,662 97,415

Rates & Taxes 119,490 47,463

Rent- Generator - 240,000

Repair & Maintenance of Building, Machineries etc. 3,050,944 2,915,721

Stationeries 369,901 426,587

Sundry Expenses 474,789 142,835

Testing Charge 16,753 5,725

Tiffin, Refreshment & Entertainment 153,746 94,345

Uniform & Liveries 18,990 19,350

Wages, Salaries & Allowances 23,476,764 17,014,254

Washing & Cleaning Expenses 36,620 15,837

70,908,279 53,445,668

25 Foreign Currency Gain/(Loss)

25.1 Realized Foreign Exchange Gain/(Loss)

Particulars Actual

Realized/

settled

amount

Realized/ settled

as per Book

Gain/(Loss) in

Taka

Gain/(Loss) in

Taka

Trade Receivable 598,733,190 606,915,272 (8,182,082) 15,002,718

Trade Payable 431,432,982 428,804,559 (2,628,423) (16,109,646)

Total: (10,810,505) (1,106,928)

25.2 Unrealized Foreign Exchange Gain/(Loss)

Particulars Monetary Asset

in FC as per Bank

Statement

BDT as on

30/06/2016

as per

closing rate

BDT as per

Books of

Accounts

Gain/(Loss)

in Taka

Gain/(Loss) in

Taka

IFIC FC A/C # 1002-535257-836 $ 6,617.53 518,814 534,134 (15,320) (531)

NBL FC A/C-0043-84004808 $ 2,042.33 160,119 171,500 (11,381) (24,072)

NBL- FCBPAR USD # 004342000069 $ - - 4,816 (4,816) (21,462)

Southeast Bank FC#15500000371 $ 169,039.18 13,252,672 13,576,671 (323,999) -

Southeast Bank USD # 15500000360 $ - - 1,617 (1,617) (51,184)

Trust Bank A/C # 5025000416 $ 274,370.45 21,510,643 21,552,239 (41,596) (1)

Trade Receivable $ 13,972,825.98 1,095,469,559 1,091,937,177 3,532,382 (2,427,987)

Trade Payable $ 10,769,828.06 844,354,520 842,428,643 (1,925,877) 2,718,717

Total: 1,207,776 193,480

Total gain/(Loss) (24.1+24.2) (9,602,729) (913,448)

26 Other Income:

This consist of the followings;

Income from Interest on FDR 3,785 309,513

Land and House Rent 723,915 703,325

Gain/(Loss) from sale of fixed assets 26.1 (214,810) -

Waiver of Interest-Foreign Loan 11,625,225 -

Sundry Income 328,359 299,873

12,466,474 1,312,711

26.1 Profit/(Loss) on Sale of Fixed Assets

Sales Value of Motor Vehicle 600,000 -

Less:WDV of Motor Vehicle (814,810) -

(214,810) -

27 Selling & Distribution Expenses


Salary and Allowances 889,350 751,350

Travelling & Conveyance 910,885 93,670


Mobile Bill 16,823 21,600


Contribution to Provident Fund 50,296 -

1,977,383 975,556

28 Administrative Expenses


Advertising Expenses 4,000 -

Amortization of Intangible Assets 8,898 11,123

Audit Fees 115,000 57,500

Professional Fees 910,850 365,266

Automobile Expenses 898,039 692,098


Contribution to Provident Fund 201,106 74,290

Depreciation-Administrative 1,725,555 1,670,445

Electricity Bill 465,150 465,203

Forms, Stamps, Documents etc. 150,689 155,277

Gas Bill 15,470 12,642

Generator Expenses 29,500 30,400

Insurance-Motor 147,319 -

Internet Expenses 77,405 60,360

Licence & Renewal Fees 18,520 32,070

Office Maintenance Expenses 173,619 126,345

Papers & Periodicals 53,460 2,970

Postage & Courier 41,911 25,483

Printing & Photocopy 56,255 44,062

Salary & Allowances 6,182,739 3,553,751

Satellite Cable Rent 2,700 2,700


Sundry Expenses 174,503 161,204

Telephone & Mobile Expenses 72,594 148,624

Tiffin, Refreshment & Entertainment 162,044 112,593

Travelling & Conveyance 173,999 212,363

Water Bill 41,050 30,254

12,305,498 8,536,146

29 Financial Expenses


Bank Charges & Commission 1,728,159 1,960,830

Bank Charges on Proceeds Realization 1,137,574 576,761

Interest on Short Term Loan 13,055,242 32,564,867

Interest on Obligation under Finance Lease 210,251 174,055

16,131,226 35,276,513

30 Current tax:

The above balance is made up as follows:

Income tax on business income 30.1 7,353,329 6,852,750

Income tax on other income 30.2 4,363,266 459,449

Total 11,716,595 7,312,199

30.1 Income tax on business income:

Profit before tax 59,901,062 41,718,466

Add: Accounting depreciation & Write Off 12,900,845 13,429,557

Add: Contribution to Employees' Gratuity Fund 760,022 760,022

Less: Tax depreciation (11,573,265) (8,910,331)

Less: Contribution to Employees' Gratuity Fund (500,000) -

Less: Other income (12,466,474) (1,312,711)

Taxable business income 49,022,190 45,685,003

Tax rate 15% 15%

Income tax on business income 7,353,329 6,852,750

30.2 Income tax on other income:

Other Income 12,466,474 1,312,711

Tax rate 35% 35%

Income tax on other income 4,363,266 459,449

31 Earning per share

Basic Earning per Share:

Net profit after tax attributable to

ordinary shareholders of the company

48,199,648 40,401,730

Weighted average number of share (Note-31.1) 104,205,986 19,119,400

Basic EPS for the period 0.46 2.11

Re-stated Earning Per Share for

Capitalization of Share Money Deposit:

Net profit after tax attributable to

ordinary shareholders of the company

48,199,648 40,401,730

Number of Share considered to Calculate

re-stated EPS

(Note-31.2) 104,205,986 63,439,220

0.46 0.64

31.1 Weighted average number of share

Particulars Number of

share

Number of

share

19,119,400 No. of Ordinary Shares for 91 days - 19,119,400

104,205,986 No. of Ordinary Shares for 91 days 104,205,986 -

104,205,986 19,119,400

31.2 Number of Share considered to calculate re-stated EPS

Particulars Number of

share

Number of

share

19,119,400 No. of Ordinary Shares for 91 days - 19,119,400

44,319,800 No. of Ordinary Shares for 91 days

capitalized from share money deposit during the

period ended 30.06.2016

- 44,319,820

104,205,986 No. of Ordinary Shares for 91 days 104,205,986 -

104,205,986 63,439,220

32 Received from Customers & Others

Revenue during the period 756,861,925 750,786,410

Adjustment for Intangibles recognized in Accounts

Receivable adjusted with retained earnings

- (17,770,413)

Adjustment for Foreign Exchange Gain / (Loss) for Trade

Receivable

(4,649,700) 12,574,731

Other Income 12,466,474 1,312,711

Adjustment for Profit/(Loss) on sale of Fixed

Assets

214,810 -

Adjustment for Waiver of Interest on foreign loan

included in other income

(11,625,225) -

Opening Accounts & Other Receivable 937,947,151 659,502,234

Closing Accounts & Other Receivable (1,091,466,500) (947,708,626)

599,748,935 458,697,047

33 Payment to Creditors, Suppliers, Employees and

Others

Cost of goods Sold (669,410,501) (664,678,992)

Selling & Distribution Expenses (1,977,383) (975,556)

Administrative Expenses (12,305,498) (8,536,146)

Adjustment for Depreciation 12,891,947 13,429,557

Adjustment for Write off of Intangible Assets 8,898 11,123

Adjustment for Gratuity Fund adjusted with retained

earnings

- (23,970,636)

(Increase)/Decrease in Inventory 196,114,483 1,586,829

(Increase)/Decrease Advance Deposits &

Prepayments

(2,880,707) 6,844,702

Increase/(Decrease) in Trade and Other Payables (75,070,515) 232,637,839

Increase/(Decrease) in Liabilities for Expenses (9,452,651) 21,536,511

Adjustment for Foreign Exchange Gain / (Loss) for Trade

Payable

(4,554,300) (13,390,929)

Payable included in Trade & Other Payable considered in

acquisition of property, plant and equipments of Investing

Activities

(8,915,000) -

Payable included in Trade & Other Payable considered in

Capital Work-in-progress of Investing Activities

(15,625,428) -

Lease Deposit included in Advance Deposits &

Prepayments considered separately in investing activity

- 414,220

Net Advance Income Tax included in Advance Deposits &

Prepayments considered separately

4,226,203 2,747,255

(586,950,452) (432,344,223)

34 Income Tax Paid

Opening Advance Income Tax 58,001,751 42,385,164

Closing Advance Income Tax (62,227,954) (45,132,419)

Closing Income Tax Provision 82,447,656 54,503,699

Opening Income Tax Provision (70,731,061) (48,691,500)

Current Tax during the period (11,716,595) (7,312,199)

(4,226,203) (4,247,255)

35 Payment for Capital Work-in-Progress

Opening Capital Work-in-Progress 43,123,793 -

Closing Capital Work-in-Progress (50,407,119) -

Transfer to Property, Plant & Equipments (12,000,000) -

Payable for imported machineries included in Trade & Other Payable 15,625,428 -

(3,657,898) -

36 Disclosure as per requirement of BAS-8: "Accounting Policies, Changes in Accounting Estimates and

Errors"

During the period the following retrospective adjustment has been made in the financial statements

for change in accounting policy/correction of errors:

36.01 During the year ended 31 March 2016 depreciation was erroneously understated by Tk. 2,737,695 for

which correction has been made retrospectively as under:

Corrected Depreciation

Factory Overheads 45,418,352

Administrative Expenses 6,778,786

52,197,138

Depreciation charged as per financial statement for the year

ended 31 March 2016:

Factory Overheads 43,851,803

Administrative Expenses 5,607,640

49,459,443

Depreciation undercharged 2,737,695

Accumulated depreciation has been re-stated as

under:

Opening balance as on 01 March 2015 as per Financial

Statements

453,810,178

Add: Charged during the year ended 31 March 2016 49,459,443

Add: Correction for under charged depreciation 2,737,695

Less : Adjustments made during the year (589,544)

Restated Accumulated Depreciation as on 31.03.2016 505,417,772

Net profit before tax has been re-stated as under:

Net Profit before tax as per Financial Statements 149,936,589

Less: Depreciation understated (2,737,695)

Corrected Net Profit before tax 147,198,894

36.02 During the year ended 31 March 2016, as the tax provision is being at actual and deducted at source

under section 53BBBB as final settlement as per section 82( c) (2)(kk) of ITO 1984, no deferred tax

asset or liabilities except deferred tax on revaluation reserve were recognized in the financial

statements and deferred tax recognized prior to that year was reversed accordingly.

During the period section 82(c) has been changed by the Finance Act 2016 from final settlement to

minimum tax for which tax deducted at source shall not be considered as final settlement of tax

liability rather shall be treated as minimum tax payable. Thus deferred tax has been recognized in the

financial statements and retrospective effect has been given as under:

Opening balance as on 01 March 2015 as per Financial Statements 131,165,465

Add/(Less): Deferred Tax Expenses/(Income) recognized in Statement of

Profit or Loss and other comprehensive income

(10,152,479)

Add/(Less): Deferred Tax Expenses/(Income) recognized directly in


(1,470,737)

Re-stated deferred Tax Liabilities/(Assets) as on 31.03.2016 119,542,249

The detailed calculation of deferred tax (Income)/expenses has been given in Annexure: F

36.03 Prior to current period, depreciation on revaluation to be transferred from revaluation reserve to

retained earnings was wholly transferred instead of transferring net of tax. Moreover, deferred tax on

revaluation of property, plant and equipments which should be recognized directly in equity as per

para 58 and 61A of BAS-12: "Income Taxes", recognized in Profit or Loss and other Comprehensive

Income. These are corrected as under:

Depreciation transferred as per Financial Statements up to 31.03.2015

56,200,248

Actual transfer of depreciation should be after netting of tax @15% 47,770,211

Excess depreciation on revaluation transferred from revaluation reserve

to retained earnings which is deducted from retained earning and added

to revaluation surplus to re-state the opening balance as on 01.04.2015

8,430,037

Deferred Tax expenses/(income) on revaluation recognized in profit or

loss and other comprehensive income of financial statements up to

31.03.2015 which is deducted from revaluation reserve and added to

retained earnings

56,432,237

36.04 For the adjustments made in note 35.01 and 35.02, income tax expenses, Net profit after tax, Earning

per share has been changed as under:

Corrected net profit before tax as calculated in note 35.01 147,198,894

Less: Income Tax Expenses (15,858,066)

Current Tax (Expenses)/Income (26,010,545)

Deferred Tax (Expenses)/Income Annexure: F 10,152,479

Corrected Net Profit after tax for the year ended 31.03.2016 131,340,828

Weighted Average number of share to calculate Basic earnings per share 30,075,755

Basic Earning Per Share 4.37

Current tax:

Income tax on business income 22,711,661

Income tax on other income 3,298,884

Total 26,010,545

Income tax on business income:

Corrected net profit before tax as calculated in note 35.01 147,198,894

Add: Accounting depreciation & Write Off 52,241,630

Add: Contribution to Employees' Gratuity Fund 3,040,188

Add: Provision for Doubtful Debt 4,222,845

Less: Tax depreciation (45,970,257)

Less: Contribution to Employees' Gratuity Fund (550,000)

Less: Other Income (8,772,225)

Taxable business income 151,411,075

Tax Rate 15%

Current tax on business income 22,711,661

Income tax on other income:

(A) Income tax @ 35% except Capital Gain on Sale of Land 2,193,284

(B) Income Tax @ 4% of deed value or 15% on Capital Gain of Sale of Land

whichever is higher

1,105,600

Total (A+B) 3,298,884

37 Disclosure as per requirement of schedule XI, Part-II of companies Act 1994

37.1 Commission, Brokerage or Discount against sales:

a. There was no brokerage or discount against sales during the period.

b. No commission was paid to sales against during the period.

37.2 Related party disclosures

The Company has entered into transactions with other entities that fall within the definition of related

party as contained in BAS-24 "Related Party Disclosures" The Company opines that terms of related

transaction do not significantly differ from those that could have been obtained from third parties .

Total transactions of the significant related parties as at 30.06.2016 are as follows:

Name of Related

Party

Relationship Nature of

Transaction

30.06.2016 31.03.2016

Shepherd Textile (BD.)

Limited

Common

Management

Intercompany

Loan

15,100,000 29,100,000


Limited

" Office & Land

Rent

324,615 1,220,929


Limited

" Sale of Land - 27,640,000

Taiwan Food & Processing

Industries Ltd.

" Investment 62,000,000 62,000,000

Taiwan Food & Processing

Industries Ltd.

" Office Rent 199,650 728,116

Kao Wen Fu Managing Director Initially

received as

Share money

Deposit and

trasferred to

loan from

shareholder

during the

period

10,554,794 10,554,794

Ever Priority Ltd. Director " 18,786,859 18,786,859

Chen Che Seng Shareholder " 6,597 6,597

Eternal Flame Int'l Co. Inc. Director " 4,351,405 4,351,405

Chung Wen Kuei Chairman " 29,278 29,278

a) Key Management Personnel:

As per Company Act , 1994 part-II , Schedule-XI (4) The profit and loss account will give by way of a

note detailed information , showing separately the following payments provided or made during the

financial year to the directors , including managing director , the managing agents or manager , if any

,by the company , subsidiaries of the company and any other person:-

No. Particulars 30.06.2016 30.06.2015

(a) Managerial Remuneration paid or payable during the period to the

directors, including managing directors, a managing agent or

manager

2,900,625 2,514,750

(b) Expenses reimbursed to Managing Agent - -

(c) Commission or Remuneration payable separately to a managing

agent or his associate

- -

(d) Commission received or receivable by the managing agent or his

associate as selling or buying agent of other concerns in respect of

contracts entered into by such concerns with the company

- -

(e) The money value of the contracts for the sale or purchase of goods

and materials or supply of services, entered into by the company

with the managing agent or his associate during the financial period.

- -

(f) Any other perquisite or benefits in cash or in kind stating,

approximate money value where applicable.

(g) Other allowances and commission including guarantee commission - -

(h) Pensions etc. - -

(i) Pensions - -

(ii) Gratuities 164,369 142,503

(iii) Payments from a provident funds, in excess of own

subscription and interest thereon

197,244 171,003

(i) Share Based payments -

As per BAS- 24:

An entity shall disclose key management personnel compensation in total and for

each of the following benefits:

(a) Short-term employee benefits 2,900,625 2,514,750

(b) Post-employee benefits 361,613 313,506

(c) Other long term benefits - -

(d) termination benefits and - -

(e) share- based payment - -

Total: 3,262,238 2,828,256

37.3 Production capacity and utilization:

As per the nature of the industry, production quantity of dyeing varies with the course of year produce

on the basis of production design as per market demand. Therefore, installed capacity in terms of

multiple and frequently changeable product mix is not constant factor. During the period under review,

actual production, the installed capacity in terms of the counts produced and the utilization rate in

appended below;

Description Installed Capacity Actual

Production

% of

Capacity

Utilization

Different Count of Yarn Dyeing 80,000 Lbs/Day 63,256 Lbs/Day 79.07%

37.4 Value of Import at CIF basis:

During the period from April 01 to June 30, 2016 total value of import in respect of raw yarn, dyes &

chemical, spare parts and machineries stands at equivalent 3.85 Millions USD on CIF basis. Details are

given below:

Particulars Amount

(Tk.)

Raw Yarn 227,665,605

Dyes & Chemicals 98,835,080

Spare Parts 341,484

Machineries 15,625,428

Tools 6,072,900

348,540,497

37.5 Percentage of Materials consumed to the

total consumption

Material consumed

Amount (BDT) Percentage

(%)

Raw Materials 481,132,670 81.53%

Dyes & Chemicals 102,524,867 17.37%

Packing Materials 6,444,014 1.09%

590,101,551 100.00%

37.6 Payment in foreign currency: Foreign

Currency

(USD)

Raw Yarn 6,861,272

Dyes & Chemicals 1,194,316

Tools & Equipments 42,283

38 Number of Employees

All the employees receive salary/wages in excess of Tk. 3,000 per month.

Number of permanent staff 210

Number of permanent workers 386

Number of temporary

staff/worker

-

Total: 596


217


Annexure-A


as on June 30, 2016

Amount in Taka

Particulars Cost Depreciation Written Down

Value as on 30-

06-2016

Opening Balance

as on 01-04-2016

Addition /

Transfer

Disposal Closing Balance

as on 30-06-2016

Rate

(%)

Opening balance

as on 01.04.2016

Charged during

the period

Disposal Closing

Balance as on

30-06-2016

1 2 3 4=(1+2-3) 5 6 7=(4-6)×5 8 9=(6+7-8) 10=4-9

Building - Factory 136,278,694 35,039,845 - 171,318,539 10% 57,700,580 2,246,980 - 59,947,560 111,370,979

Land & Land Development 263,443,642 215,000 - 263,658,642 0% - - - - 263,658,642

Plant & Machinery 467,998,721 - - 467,998,721 10% 296,240,531 4,258,271 - 300,498,802 167,499,919

ETP 73,844,334 - - 73,844,334 15% 26,323,826 1,759,836 - 28,083,662 45,760,672

Electric Equipment & Line

Installation

29,741,989 618,100 - 30,360,089 10% 19,471,911 260,043 - 19,731,954 10,628,135

Fire Fighting Equipment 1,096,354 - - 1,096,354 10% 609,082 12,081 - 621,163 475,191

Tools & Equipments 3,750,163 7,147,010 - 10,897,173 20% 1,075,156 267,174 - 1,342,330 9,554,843

Gas Line Installation 6,755,553 - - 6,755,553 10% 4,303,169 60,800 - 4,363,969 2,391,584

Building - Head Office 64,152,000 - - 64,152,000 5% 11,837,639 651,209 - 12,488,848 51,663,152

Office Equipment 12,021,112 274,910 - 12,296,022 10% 6,932,436 129,308 - 7,061,744 5,234,278

Air Conditioner & Electric

Appliance

1,430,516 212,200 - 1,642,716 10% 490,359 26,963 - 517,322 1,125,394

Lift - Head Office, Uttara 1,820,971 64,977 - 1,885,948 10% 609,324 31,117 - 640,441 1,245,507

Furniture & Fixture 4,001,177 70,365 - 4,071,542 10% 1,818,634 55,547 - 1,874,181 2,197,361

Office Decoration 2,285,053 - - 2,285,053 10% 927,801 33,649 - 961,450 1,323,603

Car & Vehicles 29,863,586 1,377,600 2,241,996 28,999,190 15% 9,290,968 757,400 1,427,186 8,621,182 20,378,008

Telephone & Equipments 3,380,765 44,825 - 3,425,590 10% 1,781,189 40,362 - 1,821,551 1,604,039

Sub Total 1,101,864,630 45,064,832 2,241,996 1,144,687,466 439,412,605 10,590,740 1,427,186 448,576,159 696,111,307

REVALUATION PART

Land & land Development 547,605,914 - - 547,605,914 - - - - - 547,605,914

Building 158,824,830 - - 158,824,830 10% 66,005,167 2,301,207 - 68,306,374 90,518,456

Sub Total 706,430,744 - - 706,430,744 66,005,167 2,301,207 - 68,306,374 638,124,370

Total as on 30.06.2016 1,808,295,374 45,064,832 2,241,996 1,851,118,210 505,417,772 12,891,947 1,427,186 516,882,533 1,334,235,677

Total as on 31.03.2016 1,807,952,324 26,614,290 26,271,240 1,808,295,374 453,810,178 52,197,138 589,544 505,417,772 1,302,877,602


218

Annexure-B


Schedule of Closing Inventory

as on June 30, 2016

Name of Items 30.06.2016 31.03.2016

Qty in

Lbs/Kg

Average

Rate

Total Tk Qty in Lbs/Kg Average

Rate

Total Tk

A) RAW MATERIALS:

Raw Yarn 7,660,763 115.63 885,778,015 9,331,631 115.68 1,079,455,235

B) DYES & CHEMICALS:

Dyes 140,278 874.57 122,682,947 141,051 874.45 123,342,432

Chemicals 425,246 137.05 58,279,945 430,845 137.35 59,176,536

565,524 319.99 180,962,892 571,896 319.15 182,518,968

C) Work in Process: 198,117 128.06 25,369,907 189,000 127.99 24,190,990

D) Finished Goods:

Dyed Yarn 470,981 161.59 76,105,239 505,186 160.40 81,031,479

E) Packing Materials 5,428,062 5,184,031

F) Store & Spares 10,521,843 7,899,738

Grand total (A+B+C+D+E+F): 1,184,165,958 1,380,280,441

-

Annexure-C


Schedule of Accounts & Other Receivables

as on June 30, 2016 S.L Particulars Amount in Taka Amount in Taka

30.06.2016 31.03.2016

Trade Receivable

1 AB Sweater Ltd 12,784,182 4,359,256

2 AKR Fashion Ltd 134,993 134,993

3 Al- Amin Export Ltd 2,625,281 274,292

4 Aman Knitters Ltd. - 1,065,131

5 AMS Int'l Sweater Ltd 2,034,323 2,034,323

6 Annanta Huazin Ltd. 3,358,894 3,358,894

7 Annesha Style Ltd 3,468,184 13,742,898

8 Anzir Apparels Limited 1,842,265 180,783

9 As Apparels Ltd. 33,115,434 33,115,434

10 Azam Knitting Ltd - 2,225,607

11 Banga Fashion Ltd 1,086,585 -

12 Best Wool Sweater Ltd. 101,299,324 82,914,597

13 Body Fashion (PVT) Ltd 1,130,776 -

14 Claxton Apparels 4,378,887 3,684,693

15 Cosmos Sweater Ltd 13,308,065 84,600,529

16 Crown Fashion & Sweater - -

17 Crown Yarn Dyeing Ltd - 1,136,800

18 Daeyu Bangladesh Ltd. - 1,048,796

19 Desh Sweater Ltd 75,243 309,816

20 Dhaka Pullover Ltd. 2,314,317 -

21 Diganta Sweater Ltd 77,377,808 29,754,363

22 Din Apparels Ltd. 1,560,060 3,187,056

23 Dody Export Wear Ltd 730,711 2,517,714

24 D & S Pretty Fashion 722,821 2,237,180

25 Ducati Apparels Ltd 957,912 1,942,028

26 Dynamic Sweater Ltd 7,517,590 2,510,619

27 Ehsan Fashion Ltd 3,077,811 2,616,184

28 Ekram Sweater Ltd. 13,478,665 415,622

29 En Rich Ltd. 14,785 14,785

30 ESE Knitwear Ltd 5,553,307 -

31 Eva Sweater Ltd. 5,601,029 1,948,248

32 Everbright Sweater Ltd 3,926,997 1,339,731

33 Evergreen Sweater 2,207,270 1,926,907

34 Fancy Yarn Department 140,532 140,532

35 Fashion Design Ltd 1,277,046 1,277,046

36 FB Fashion (Pvt) Ltd. 937,060 2,050,004

37 Freedom Knit Ltd 1,883,591 -

38 Fyne Sweater Ltd. 1,694,224 -

39 Global Knitwear Ltd. 14,990,997 26,122,549

40 Golden Times Sweater Ltd. - 1,090,092

41 Green Arrow Sweater Ltd. 4,969,956 10,184,776

42 Haesong Korea Ltd. 18,224,856 -

43 Haesong Sweater Ltd 248,504 -

44 Hamid Fashion Ltd. 3,480,874 -

45 Hannan Fashion Ltd 1,711,258

46 Helicon Ltd. 9,839,431 7,635,666

47 Impulse Sweater Ltd 5,076,760 3,500,631

48 Indesore Sweater Ltd. 12,946,494 8,206,654

49 Intramex Sweater Ltd. 387,649 -

50 Irish Fashion Ltd. 31,804,255 19,889,842

51 Jams Sweater Ltd 4,997,742 1,378,385

52 Jazz Sweater Ltd 5,441,542 -

53 Knitexpo Ltd 7,075,530 1,073,795

54 Knit Studio Ltd. 2,695,417 -

55 Kuliarchar Sweater 7,426,065 921,476

56 Lusine Fashion Ltd. 22,340,745 3,264,367

57 Magpie Knitwear Ltd. 34,135,998 3,623,570

58 Mahdeen Sweater Ltd. 13,771,034 22,172,931

59 Mantrust Sweater Ltd. - 99,176

60 Mark Sweater Ltd. - 667,321

61 Masihata Sweater Ltd - 2,089,360

62 Matrix Sweater 25,991,799 20,246,863

63 McCoy Sweater Ltd. 369,107 -

64 Meditex Ind. Ltd. 32,154,701 38,065,482

65 Meek Sweater Ltd 1,689,050 1,689,050

66 Merline Knittwear Ltd - 8,636,978

67 M.G. Knit Fiairs Ltd 3,663,005 12,348

68 Micro Tex Ltd 217,764 217,764

69 Midline Fashion Ltd - 1,306,881

70 M I Knit Wear Ltd 2,346,355 -

71 MK Sweater 3,545,507 2,940,329

72 Moni Fashion Ltd 39,385,263 17,588,312

73 Natural Sweater Village 10,039,144 -

74 Natural Wool Sweater 866,442 -

75 Naziat Sweaters Ltd. 1,808,225 1,470,761

76 New Horizon Ltd. 4,222,845 4,222,845

77 Nexus Sweater 6,957,745 2,321,834

78 Nurani Deying - 2,884,893

79 Oasis Fashions Ltd 13,662,313 -

80 Ocean Sweater Ltd - 1,032,014

81 Odessa Fashion Ltd. 5,032,395 5,242,385

82 Omega Sweater 2,199,241 177,321

83 Oriental Wool Wear Ltd - 1,294,447

84 Orpat Sweater Ltd 2,078,215 562,763

85 Padma Sweater 202,861 202,860

86 Panache Knitted Creation 70,560 70,560

87 Pandora Fashion Ltd 3,993,117 9,839,091

88 Pioneer Sweater Ltd. 130,580,546 93,219,486

89 Posmi Sweater Ltd 1,784,499 1,122,372

90 Pretty Sweater Ltd 37,758,321 7,278,923

91 Prodridhi Apparel Ltd 2,470,074 1,538,271

92 Pro- Maker Sweater 5,097,594 3,396,016

93 Radient Sweater Ltd. 6,641,634 3,625,794

94 Rahimaaziz Knits Ltd 1,883,364 -

95 Raozan Sweater Ltd. 6,347,858 11,299,549

96 Red & Green Textile 361,267 -

97 RGR Sweater Ltd 2,687,507 4,761,285

98 Riverside Sweater Ltd 3,119,536 2,096,040

99 R M M Sweater Ltd 4,189,365 10,298,873

100 Rose Sweater Ltd. 928,960 6,540,111

101 R S Sweater Ltd 4,157,094 1,147,961

102 Running Fashion Ltd. 4,723,083 3,473,708

103 Rupa Sweater Ltd. 19,843 1,610,932

104 Saadatia Sweater Ltd. 3,121,164 3,021,334

105 Sahaba Yarn Ltd 2,263,941 2,263,941

106 Salek Textile Ltd. (Receivable) 8,163,102 -

107 Scandex (BD) Ltd. 580,356 -

108 Seowan Bangladesh Ltd. 13,076,648 94,541,223

109 SFS Sweater Ltd - 330,534

110 S F Sweaters Ltd. 3,615,233 5,500,620

111 Sharin Fashion Ltd 9,929,497 7,850,439

112 Shezads Designer 11,209,619 536,021

113 Shomahar Sweater 15,745,823 112,952

114 Sinha Knit Ind. Ltd 9,237,209 1,101,642

115 Smung Sweater Ltd 550,598 12,537,958

116 Sonia & Sweater Ltd. 7,848 -

117 Southend Sweater Ltd 1,261,272 2,271,085

118 Southern Clothing Ltd. - 5,096,439

119 Space Sweater Ltd 1,901,639 1,890,067

120 Spring Trade 10,712,807 23,913,222

121 SQ Celsius Ltd 6,820,769 -

122 SQ Huse LTD - 290,425

123 Sung Kwang Apparels 21,162,512 40,696,367

124 Sunkit Textile Ltd. 77,357

125 Tapestry Design Co. 137,200 137,200

126 Target Fine Knit Industries Ltd. 16,870,360 10,282,984

127 T. Design 93,139 -

128 That's It Knit Ltd. 149,609 4,778,099

129 Titas Sweater Ind. Ltd 2,228,175 314,384

130 TJ Sweater Ltd 7,295,711 439,290

131 Top Tex Ltd 2,433,765 231,264

132 Unicorn Sweater 1,694,042 -

133 Welldone Apparels Ltd 42,943,958 36,653,638

134 Woolen & Wool Ltd 2,255,132 -

135 Y.K. Sweater Ltd 7,764,949 9,854,152

136 Your Fashion Ltd 7,450,105 -

137 Zon Ron Sweater Ltd. - 445,527

138 Z.R Sweater Ltd - 3,767,904

Total Trade Receivable 1,095,469,559 941,990,523

Less: Provision for Doubtful Debts- New Horizon (BD) Ltd. 4,222,845 4,222,845

Total Receivable Considered as Good 1,091,246,714 937,767,678

Other Receivable

Office Rent 214,739 178,211

Interest Receivable on FDR 5,047 1,262

Total Other Receivable 219,786 179,473

Annexure-D


Schedule of Advance, Deposit & Prepayments

as on June 30, 2016

S.L Particulars Amount in Taka Amount in Taka

30.06.2016 31.03.2016

A) ADVANCES:

1 Advance Tax Paid 62,227,954 58,001,751

2 Advance against consultancy 1,862,500 1,462,500

3 Abdullah Al Harun Eusuf 19,493 34,493

4 Anamul Haque Mollah 46,875 56,250

5 BITS Solutions Ltd - 275,000

6 BRB Cable Industries Ltd - 2,068

7 Capt. Arifur Rahman - 52,000

8 Bentech Chemical Co. Ltd - 782

9 Fency Yarn Department 2,675,663 1,293,468

10 Taipei Office 415,200 435,200

11 Ejajul Ashik (Sr. Com.) 2,500 10,000

12 Genetic Power & Engineering Ltd 787,000 287,000

13 Idyllic Technology 160,000 150,000

14 Mark Trade International 57,162 57,162

15 Md. Shopon Miah (Peon) 2,000 8,000

16 Babul Bhuiyan- Driver 14,000 26,000

17 Ring Shine Textile Ltd. 18,680 18,680

18 M/S Nazrul and Brother 43,740

19 Salek Textile Ltd. 97,704

20 Tahmina Carrying Center 97,000 30,000

Sub Total: 68,527,471 62,200,354

B) DEPOSITS:

1 Anser and VDP 185,532 185,532

2 Bank Guarantee Margin 3,150,507 3,150,507

3 Israil Talukder 50,000 50,000

4 L/C Margin- Southeast - 3,344,750

5 L/C- Margin Trust Bank - 101,660

6 Lease Deposit 414,220 414,220

7 PDB (Bhaluka) 563,500 563,500

8 RAK Security and Services (Pvt) Ltd. 30,000 30,000

9 Security Deposit- DESCO 144,000 144,000

10 Titas Gas T&D Co. Ltd. 4,778,903 4,778,903

Sub Total: 9,316,662 12,763,072

Grand Total: 77,844,133 74,963,426

Annexure: E


Schedule of Paid up Capital as on June 30, 2016

SL.No. Name of Shareholder No. of Shares Amount % of Shares

01 A.H. Enterprise 750,000 7,500,000 0.72%

02 Abu Saleh Abdul Muiz 500,000 5,000,000 0.48%

03 Agro Atmosphere Ltd 750,000 7,500,000 0.72%

04 Chang Hung Jung 250,000 2,500,000 0.24%

05 Chang Shih Lin 903,500 9,035,000 0.87%

06 Chang Shu Ling 661,761 6,617,610 0.64%

07 Chen Chen Yen 3,209,115 32,091,150 3.08%

08 Chen Huang Lee Be 1,787,735 17,877,350 1.72%

09 Chen Shu Fen 1,400,000 14,000,000 1.34%

10 Chen Xiao Yuan 600,000 6,000,000 0.58%

11 Cheng Che Seng 1,720,680 17,206,800 1.65%

12 Chung Wen Kuei 3,261,415 32,614,150 3.13%

13 Eternal Flame Int'l Co.Inc. 10,886,580 108,865,800 10.45%

14 Ever Priority Ltd 43,035,650 430,356,500 41.30%

15 Huang Cheng Fei 1,632,456 16,324,560 1.57%

16 J.K. Enterprise 850,000 8,500,000 0.82%

17 Kang Ok Lee 2,000,000 20,000,000 1.92%

18 Kao Chi Fu 300,000 3,000,000 0.29%

19 Kao Chun Che 1,807,001 18,070,010 1.73%

20 Kao Wen Fu 3,717,549 37,175,490 3.57%

21 Konika Kaiser 100,000 1,000,000 0.10%

22 Lee Huei Chun 903,501 9,035,010 0.87%

23 Li Hsing Chieh 652,665 6,526,650 0.63%

24 Liang Xiao Ping 1,050,000 10,500,000 1.01%

25 Lin Wen Yu 3,974,048 39,740,480 3.81%

26 Liu Liang Ching 700,000 7,000,000 0.67%

27 Liu Shuang Chuan 2,500,000 25,000,000 2.40%

28 Md. Abdul Manan 1,100,000 11,000,000 1.06%

29 Md. Delwar Hossain 100,000 1,000,000 0.10%

30 Mohammad Zulker Naim 200,000 2,000,000 0.19%

31 Nadia Shah 600,000 6,000,000 0.58%

32 Nahid Chowdhury 500,000 5,000,000 0.48%

33 Nusrat Jahan Rimi 300,000 3,000,000 0.29%

34 Shen Ming - Hsiung 560 5,600 0.00%

35 Syeda Lulu Mubin 350,000 3,500,000 0.34%

36 Thitiping Apitanota 1,160,000 11,600,000 1.11%

37 Tseng Ya Fen 2,428,750 24,287,500 2.33%

38 Wang Chun Ta 250,000 2,500,000 0.24%

39 Yang Bo Chen 652,665 6,526,650 0.63%

40 Yang Ming Te 1,320,000 13,200,000 1.27%

41 Yang Wan Chun 960,000 9,600,000 0.92%

42 Yao Jian Zhong 1,160,000 11,600,000 1.11%

43 Yin Shih Wen 3,220,355 32,203,550 3.09%

Total: 104,205,986 1,042,059,860 100.00%

Annexure: F

Shepherd Industries Ltd

Calculation of Deferred Tax

Particulars

01.04.2016 01.04.2015 01.04.2015 01.01.2015

to to to to

30.06.2016 31.03.2016 30.6.2015 31.03.2015

A. D.Tax (income) / expenses recognized

in profit and loss and other

comprehensive income:

Cost:

Carrying amount:

Property , Plant and Equipment 432,452,665 399,008,383 419,080,411 418,365,612

Intangible Assets 169,068 177,966 211,335 222,458

Provision for Doubtful Debt (4,222,845) (4,222,845) - -

Provision for gratuity (26,720,846) (26,460,824) - -

401,678,042 368,502,680 419,291,746 418,588,070

Tax base:

Property , Plant and Equipment 245,194,507 211,912,914 234,967,001 194,286,390

Intangible Assets 61,992 67,018 88,559 95,740

Provision for Doubtful Debt - - - -

Provision for gratuity - - - -

245,256,499

211,979,932

235,055,560

194,382,130

Taxable /(Deductible) temporary

difference

156,421,543

156,522,748

184,236,186

224,205,940

Income Tax rate 15.00% 15.00% 15.00% 15.00%

Deferred Tax Liabilities/(Assets) at the

end of the year/period

23,463,231

23,478,412

27,635,428

33,630,891

Closing Deferred Tax Liabilities/(Assets)

23,463,231

23,478,412

27,635,428

33,630,891

Opening Deferred Tax

Liabilities/(Assets)

(23,478,412)

(33,630,891)

(33,630,891)

D.Tax (income) / expenses recognized

in profit and loss and other

comprehensive income

(15,181)

(10,152,479)

(5,995,463)

B. D.Tax (income) / expenses recognized

in Revaluation Reserve:

Revaluation:

Carrying Amount:

Land and Land Development 547,605,914 547,605,914 547,605,914 547,605,914

Building 90,518,456 92,819,663 100,080,288 102,624,582

638,124,370 640,425,577 647,686,202 650,230,496

Tax base:

Land and Land Development -

Building - - - -

- - - -

Taxable /(Deductible) temporary

difference

638,124,370 640,425,577 647,686,202 650,230,496

Tax rate 15.00% 15.00% 15.00% 15.00%

Deferred tax liability end of the

year/period

95,718,656

96,063,837

97,152,930

97,534,574

Closing Deferred Tax Liabilities/(Assets)

95,718,656

96,063,837

97,152,930

97,534,574

Opening Deferred Tax

Liabilities/(Assets)

96,063,837

97,534,574

97,534,574

-

D.Tax (income) / expenses recognized

in Revaluation Reserve:

(345,181)

(1,470,737)

(381,644)

C. Total Deferred tax liability at end of

the year/period as shown in the

Statement of Financial Position (A+B)

119,181,887

119,542,249

124,788,358

131,165,465

Annexure-G


Schedule of Trade & Other Payables

as on June 30, 2016

S.L Particulars Amount in Taka Amount in Taka

30.06.2016 31.03.2016

A: Accounts Payables for Trade

1 Ben Tech Chemicals Co. Ltd. 101,818 1,691,613

2 Chin Hung Fabred Ltd 1,814,827 -

3 Everlight Chemical Industrial 5,699,680 4,417,840

4 Foshan Shunde Aolaimei Fine Chemicals Co.Ltd 1,657,454 -

5 Full Excellent Corp. 36,482,091 34,114,981

6 Full Harbest Ltd. 336,551,587 545,453,038

7 Guangzhou Chemicals Import & Export Co. Ltd 1,470,000 1,470,000

8 Hwa Tal Industries ltd - 1,481,760

9 Jiangsu Gtig Hubo Co. Ltd - -

10 Jiangsu Gua Tai International Group Guo Mao Co Ltd 4,106,694 -

11 Jolly Enterprise India 7,342,180 -

12 Kung Keng Textile (BD) Ltd. 50,594,596 88,968,160

13 Mega Hope Textile Ltd 25,667,908 397,488

14 Ming Tai Textile Ltd - -

15 MPI Polyester Industries Sbn.Bhd 10,484,151 -

16 Nagoreeka Exports Ltd. 10,972,503 -

17 Nahar Spinning Mills Ltd - -

18 Premier Cotton Textiles. India 10,289,152 -

19 Shepherd Shing Trading Co. Ltd 19,814,877 22,859,594

20 Sonic Eagle Industries Ltd 286,122,879 207,851,448

21 Sportking India Ltd 16,074,363 5,099,247

22 S.Raza Export Pvt. Ltd 5,040,487 5,040,487

23 Sutiej Textile & industries India - 8,614,526

24 ST. Cottex Exports Pvt. Ltd. India 11,203,368 -

25 Textilchemie DR. Petry GMBH 1,575,840 -

26 Zhejiang Transfar Co. Ltd 1,288,065 4,648,549

27 ASM Chemical Industries Ltd. 1,505,027 735,947

28 Astar Recycle Industries 560,000 210,000

29 Badsha Textiles Ltd 27,431,250 43,890,000

30 Bismilah Paper Cone & Tube 350,000 350,000

31 G Q Industries ltd - 659,269

32 Grand Traders - 383,140

33 Fast Bio Chem 4,600 -

34 GDS Chemical Bangladesh Ltd 10,775 -

35 H.M. Accessories 182,250 -

36 Israq Textile Mills Ltd 15,060,797 25,398,709

37 Jafar Traders 437,500 -

38 Lucy Enterprise 73,000 -

39 Maksons Spinning Mills Ltd 18,384,717 -

40 M/S.K.S. Enterprise 4,776,200 4,400,000

41 Purbani Spinnning Mills - 11,351,340

42 Nabila Enterprise 20,475 -

43 NRG Composite Yarn Dyeing 720,000 1,113,324

44 Purbani Spinnning Mills 23,544,570 -

45 SAF Camicals - 231,747

46 Sparrow Corporation - 175,000

47 Tamijuddin Textile Mills Ltd - 1,097,730

48 R F Trading Corporation 81,500 -

49 R S Plastic Enterprise 1,017,600 -

50 R S S Trade International 191,000 -

51 Suprob Composite Knit Ltd 8,632,260 -

52 Tex Solution Services 621,404 -

53 United Chemical 1,020,000 -

54 Xin Xing Yang International Co. Ltd 405,120 -

Sub Total 949,384,564 1,022,104,937

B: Accounts Payables for others

1 Abdul Khaleq 160,000 160,000

2 Akata Container Carrier Service 62,250 62,250

3 Akota Verities Store - 8,300

4 Al Hera Design & Printers - 64,323

5 Apparel Solution Ltd. 200,000 200,000

6 Artistic Properties Limited 8,915,000 -

7 Automation Eng. & Controls ltd - 90,382

8 Bang;la Trac limited - 987,046

9 Bhander Sharif Trading Corporation 1,284,890 1,311,087

10 Billal Trading PTE Ltd. - 175,000

11 Bismillah Transport Agency 6,000 6,000

12 Build Asia 1,064,659 1,864,659

13 DYK Associates 140,686 140,686

14 Effat Shipping Agency - 509,006

15 Golden State 300,000 300,000

16 Hoque Chemicals Works 598,500 1,866,900

17 Joy Enterprise 134,520 88,493

18 Lucy Enterprise - 35,000

19 Mahfel Huq & Co. - 15,250

20 Milnars Pumps Limited - 139,000

21 Monzurul Haque 200,000 200,000

22 Motaleb Hossain 6,514 6,514

23 Nabila Enterprise - 20,475

24 Navana Poly Packaging Limited - 439,346

25 Navana Toyta 3s Center - 4,463

26 Nazia Books - 24,730

27 Nilufar Zaker - 20,000

28 Picker Limited - 341,715

29 Puma Engineering - 70,000

30 Rahat Tyre and Battery - 24,000

31 Rf Trading Construction - 39,500

32 Rifat Enterprise 2,984,951 3,000,000

33 Rs Plastic Enterprise - 729,600

34 RSS Trading International 1,133,000 1,324,000

35 Sq wire and cables - 247,500

36 Super sign industries cables - 65,000

37 Super tax cune - 396,728

38 T & M Interlining Co. Ltd 100,000 100,000

39 Tanim hua quan fine cse co - 42,000

40 Tax Soultion services - 621,404

41 The National Carrier 2,193,574 5,667,124

42 Trust printing and accseroes - 18,000

43 Urmi Auto mobiles - 4,085

44 xin xing yang international company ltd - 405,120

Sub Total 19,484,544 21,834,686

Grand Total (A+B) 968,869,108 1,043,939,623


227

Auditor's certificate regarding calculation of EPS and Ratios

This is to certify that Shepherd Industries Limited has maintained the following ratios as computed on the basis of the audited financial statements for the year ended 30 June

2016, 31 March 2016, 31 December 2014, 2013, 2012 and 2011.

Particulars Formula

30-Jun-16 31-Mar-16 31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11

Ratio

Liquidity Ratios: (Times)

Current Ratio Current assets/Current liabilities 1.38 1.39 1.14 1.15 1.17 1.23

Quick Ratio (Current assets-Inventories)/Current liabilities 0.72 0.63 0.62 0.65 0.66 0.68

Times Interest Earned Ratio Operating Profit/Financial Expenses 3.94 2.12 1.91 1.34 0.97 0.97

Debt to Equity Ratio Total debt/Total equity 0.98 1.01 1.78 1.92 1.74 1.25

Operating Ratios: (Times)

Accounts Receivable Turnover Ratio Net Credit Sales/Average Accounts Receivables 0.75 3.94 3.36 2.93 3.47 2.52

Inventory Turnover Ratio Cost of Goods Sold /Average inventory 0.52 2.25 1.99 2.12 2.47 2.02

Asset Turnover Ratio Net Sales/Average Total Assets 0.20 0.84 0.70 0.75 0.83 0.61

Profitability Ratios:

Gross Margin Ratio Gross profit/Net Sales 11.55% 11.56% 11.46% 11.25% 8.02% 9.49%

Operating Profit Ratio Operating profit/Net Sales 8.40% 9.95% 10.19% 9.71% 6.63% 7.11%

Net Profit Ratio (After Tax) Net profit after tax/Net Sales 6.37% 4.98% 4.29% 1.86% 0.09% 0.09%

Return on Assets Ratio Net profit after tax/Average Total Assets 1.25% 4.19% 2.99% 1.39% 0.08% 0.05%

Return on Equity Ratio Net profit after tax/Total Shareholders equity 2.47% 6.79% 8.22% 4.03% 0.20% 0.11%

Earnings Per Share (EPS) Net profit after tax/Total Number of Share 0.46 4.37 8.62 3.95 0.20 0.12

EBITDA Margin EBITDA=(EBIT+Depreciation+Amortization)/Total

Revenue 11.75% 11.78% 12.58% 12.01% 8.71% 10.27%

Coverage Ratio:

Debt to Assets Ratio Total debt/Total Assets 49.47% 50.14% 64.00% 65.72% 63.54% 55.57%

Debt Service Coverage Ratio Operating Profit/Long Term & Short Term Loan 0.10 0.41 0.31 0.40 0.18 0.11

Cash Flow:

Net Operating Cash Flow per Share Net Operating Cash Flow/Total number of Share 0.08 1.49 23.88 55.96 23.69 (9.43)

Net Operating Cash Flow per Share/EPS Net Operating Cash Flow per Share/EPS 0.18 0.34 2.77 14.18 117.42 (82.00)

Sd/-

Place: Dhaka

Mahfel Huq & Co.



Ratio Calculation

Particulars Formula For the period ended

30-06-16 31-03-16 31-12-14 31-12-13 31-12-12 31-12-11

Calculation Ratio Calculation Ratio Calculation Ratio Calculation Ratio Calculation Ratio Calculation Ratio


Current Ratio Current assets/Current liabilities

2,471,463,873 1.38

2,531,856,325 1.39

1,743,761,085 1.14

1,776,228,751 1.15

1,813,552,102 1.17

1,355,445,135 1.23

1,784,617,955 1,820,361,667 1,530,042,290 1,541,661,907 1,546,447,078 1,097,888,821

Quick Ratio (Current assets-Inventories)/Current liabilities

1,287,297,915 0.72

1,151,575,884 0.63

943,799,909 0.62

994,503,354 0.65

1,020,989,351 0.66

746,315,442 0.68

1,784,617,955 1,820,361,667 1,530,042,290 1,541,661,907 1,546,447,078 1,097,888,821

Times Interest

Earned Ratio Operating Profit/Financial Expenses

63,565,814 3.94

262,408,906 2.12

181,400,090 1.91

182,379,332 1.34

124,884,281 0.97

83,847,313 0.97

16,131,226 123,982,237 94,903,033 135,797,935 129,299,474 86,133,559

Debt to Equity Ratio Total debt/Total equity

1,907,803,525 0.98

1,944,379,370 1.01

1,650,201,179 1.78

1,663,018,816 1.92

1,584,952,110 1.74

1,136,393,853 1.25

1,948,472,212 1,933,656,316 928,341,072 867,584,149 909,331,778 908,657,254


Accounts Receivable

Turnover Ratio

Net Credit Sales/Average Accounts

Receivables

756,861,925 0.75

2,636,557,896 3.94

1,780,751,795 3.36

1,878,484,554 2.93

1,883,339,590 3.47

1,179,310,883 2.52

1,014,706,826 668,578,039 529,296,267 640,029,017 542,714,193 467,629,532

Inventory Turnover

Ratio Cost of Goods Sold /Average inventory

669,410,501 0.52

2,331,681,538 2.25

1,576,699,811 1.99

1,667,224,358 2.12

1,732,311,277 2.47

1,067,359,827 2.02

1,282,223,200 1,034,895,397 790,843,287 787,144,074 700,846,222 529,333,159

Asset Turnover Ratio Net Sales/Average Total Assets 756,861,925 0.20

2,636,557,896 0.84

1,780,751,795 0.70 1,878,484,554 0.75 1,883,339,590 0.83 1,179,310,883 0.61

3,867,155,712 3,135,095,395 2,554,572,608

2,512,443,427

2,269,667,497

1,947,444,595


Gross Margin Ratio

Gross profit/Net Sales 87,451,424

11.55% 304,876,358

11.56% 204,051,984

11.46% 211,260,196

11.25% 151,028,313

8.02% 111,951,056

9.49% 756,861,925 2,636,557,896 1,780,751,795 1,878,484,554 1,883,339,590 1,179,310,883

Operating Profit

Ratio Operating profit/Net Sales

63,565,814 8.40%

262,408,906 9.95%

181,400,090 10.19%

182,379,332 9.71%

124,884,281 6.63%

83,847,313 7.11%

756,861,925 2,636,557,896 1,780,751,795 1,878,484,554 1,883,339,590 1,179,310,883

Net Profit Ratio Net profit after tax/Net Sales

48,199,648 6.37%

131,340,828 4.98%

76,313,041 4.29%

34,969,372 1.86%

1,787,002 0.09%

1,018,614 0.09%

756,861,925 2,636,557,896 1,780,751,795 1,878,484,554 1,883,339,590 1,179,310,883

Return on Assets

Ratio Net profit after tax/Average Total assets

48,199,648 1.25%

131,340,828 4.19%

76,313,041 2.99%

34,969,372 1.39%

1,787,002 0.08%

1,018,614 0.05%

3,867,155,712 3,135,095,395 2,554,572,608 2,512,443,427 2,269,667,497 1,947,444,595

Return on Equity

Ratio Net profit after tax/Total Shareholders equity

48,199,648 2.47%

131,340,828 6.79%

76,313,041 8.22%

34,969,372 4.03%

1,787,002 0.20%

1,018,614 0.11%

1,948,472,212 1,933,656,316 928,341,072 867,584,149 909,331,778 908,657,254

Earnings Per Share

(EPS) Net profit after tax/Total Number of Share

48,199,648 0.46

131,340,828 4.37

76,313,041 8.62

34,969,372 3.95

1,787,002 0.20

1,018,614 0.12

104,205,986 30,075,755 8,857,400 8,857,400 8,857,400 8,857,400

EBITDA Margin EBITDA=(EBIT+Depreciation+Amortization)/To

tal Revenue

88,933,133 11.75%

310,684,934 11.78%

224,089,555 12.58%

225,616,647 12.01%

164,076,341 8.71%

121,100,538 10.27%

756,861,925 2,636,557,896 1,780,751,795 1,878,484,554 1,883,339,590 1,179,310,883

Coverage Ratio:

Debt to Assets Ratio Total debt/Total Assets

1,907,803,525 49.47%

1,944,379,370 50.14%

1,650,201,179 64.00%

1,663,018,816 65.72%

1,584,952,110 63.54%

1,136,393,853 55.57%

3,856,275,737 3,878,035,686 2,578,542,251 2,530,602,965 2,494,283,888 2,045,051,107

Debt Service

Coverage Ratio

Debt Service Coverage Ratio= (Operating

Profit/Long Term & Short Term Loan+lease)

63,565,814 0.10

262,408,906 0.41

181,400,090 0.31

182,379,332 0.40

124,884,281 0.18

83,847,313 0.11

658,462,410 643,975,030 588,211,110 450,868,359 704,531,157 739,072,572

Cash Flow:

Net Operating Cash

Flow per Share

Net Operating Cash Flow/Total number of

Share

8,572,280 0.08

44,873,978 1.49

211,558,675 23.88

495,699,357 55.96

209,822,490 23.69

(83,529,720) (9.43)

104,205,986 30,075,755 8,857,400 8,857,400 8,857,400 8,857,400

Net Operating Cash

Flow per Share/EPS Net Operating Cash Flow per Share/EPS

0.08 0.18

1.49 0.34

23.88 2.77

55.96 14.18

23.69 117.42

(9.43) (82.00)

0.46 4.37 8.62 3.95 0.20 0.12

Industry Average Ratios compare with Shepherd Industries limited:

Comparison with the industry average ratios :

Shepherd Industries Ltd.

Particulars 30-06-16 31-03-16

SIL Industry Avg. *** Remark /Explanation


Current Ratio 1.38 0.48 SIL's Current ratio is better than the industry average current ratio because of relatively lower current liabilities.

Quick Ratio 0.72 0.32 SIL's ratio is better than the industry average ratio as quick assets are relatively higher.

Times Interest Earned Ratio 3.94 9.54 SIL's ratio is not satisfactory with the average industry

Debt to Equity Ratio 0.98 1.05 SIL's ratio is better than the industry average ratio as debt burden is lower than equity


Accounts Receivable Turnover Ratio 0.75 2.41 SIL's ratio is not satisfactory with the average industry

Inventory Turnover Ratio 0.52 3.28 SIl's ratio is satisfactory with inventory maintain optimum level.

Asset Turnover Ratio 0.20 0.37 SIL's ratio is not satisfactory with the average industry


Gross Margin Ratio 11.55% 21.00% SIL's ratio is not satisfactory with the average industry.

Operating Profit Ratio 8.40% 12.39% SIL's ratio is not satisfactory with the average industry.

Net Profit Ratio 6.37% 8.54% SIL's ratio is not satisfactory with the average industry.

Return on Assets Ratio 1.25% 3.00% SIL's ratio is better than the industry average ratio as higher net profit

Return on Equity Ratio 2.47% 7.00% SIL's ratio is better than the industry average ratio as higher net profit

Earnings Per Share (EPS) 0.46 0.81 EPS of the company is created from quarter period.

EBITDA Margin 11.75% 0.23 SIL's ratio is not satisfactory with the average industry.

Coverage Ratio:

Debt to Assets Ratio 49.47% 50.51% SIL's ratio is better than the industry average ratio as debt burden is lower than equity

Debt Service Coverage Ratio 0.10 0.11 SIL's ratio is not satisfactory as net operating profit is sufficient to pay financial expense and long term debt.

Cash Flow:

Net Operating Cash Flow per Share 0.08 1.15 SIL's ratio is not satisfactory as net operating cash flow is positive

Net Operating Cash Flow per Share/EPS 0.18 1.43 SIL's ratio is not satisfactory as net operating cash flow is positive

*** The Industry average ratio is calculated through using the ratio of Anlima Yarn Dyeing Limited for the year ended March 31 , 2016 to compare 30 June, 2016 due to inavailability of market data.

(Source: www.anlima.com/financialreport.html)

Comparison with the industry average ratios of same periods:


Particulars 31-03-16

SIL Industry Avg. *** Remark /Explanation







Accounts Receivable Turnover Ratio 3.94 2.41 SIL's ratio is satisfactory with the average industry


Asset Turnover Ratio 0.84 0.37 SIL's ratio is satisfactory with the average industry





Return on Assets Ratio 4.19% 3.00% SIL's ratio is not better than the industry average ratio as higher net profit


Earnings Per Share (EPS) 4.37 0.81 SIL's ratio is satisfactory with the average industry.

EBITDA Margin 11.78% 23.00% SIL's ratio is not satisfactory with the average industry.

Coverage Ratio:


Debt Service Coverage Ratio 0.41 0.11 SIL's ratio is satisfactory as net operating profit is sufficient to pay financial expense and long term debt.

Cash Flow:

Net Operating Cash Flow per Share 1.49 1.15 SIL's ratio is satisfactory as net operating cash flow is positive


*** The Industry average ratio is calculated through using the ratio of Anlima Yarn Dyeing Limited for the year ended March 31 , 2016. (Source: www.anlima.com/financialreport.html)



Particulars 31-Dec-14

SIL Industry Avg.***

Remark /Explanation





Debt to Equity Ratio 1.78 1.05 SIL's ratio is not better than the industry average ratio as debt burden is higher than equity













Coverage Ratio:

Debt to Assets Ratio 64.00% 52.93% SIL's ratio is not better than the industry average ratio as debt burden is higher than equity


Cash Flow:



*** The Industry average ratio is calculated through using the ratio of Anlima Yarn Dyeing Limited for the year ended December 31 , 2014. (Source: www.anlima.com/financialreport.html)



SIL Industry Avg.*** Remark /Explanation





Debt to Equity Ratio 1.92 1.33 SIL's ratio is not better than the industry average ratio as debt burden is higher than equity













Coverage Ratio:

Debt to Assets Ratio 65.72% 57.10% SIL's ratio is not better than the industry average ratio as debt burden is higher than equity


Cash Flow:


Net Operating Cash Flow per Share/EPS 14.18 3.13 SIL's ratio is satisfactory as net operating cash flow is positive




Particulars 31-Dec-12 Remark /Explanation

SIL Industry Avg.***
















Earnings Per Share (EPS) 0.20 1.19 SIL's ratio is not satisfactory with the average industry.


Coverage Ratio:



Cash Flow:


Net Operating Cash Flow per Share/EPS 117.42 2.35 SIL's ratio is satisfactory as net operating cash flow is positive





SIL Industry Avg.*** Remark /Explanation
















Earnings Per Share (EPS) 0.12 1.17 SIL's ratio is not satisfactory with the average industry.


Coverage Ratio:


Debt Service Coverage Ratio 0.11 0.66 SIL's ratio is not satisfactory as net operating profit is sufficient to pay financial expense and long term debt.

Cash Flow:

Net Operating Cash Flow per Share -9.43 3.02 SIL's ratio is not satisfactory as net operating cash flow is positive

Net Operating Cash Flow per Share/EPS -82.00 2.59 SIL's ratio is not satisfactory as net operating cash flow is positive


Auditors' report under section-135 (1) and para-II of schedule -III of the companies act 1994

We have complied the accompanying statement of Shepherd Industries ltd under Section -135 (1) and para -24(1) of Schedule-III of the Companies Act 1994 . The statement comprises of the

financial information for the period ended 30 June 2016 , 31 March 2016, 01 April 2015, 31 March 2015 and 31 December 2014, 2013, 2012 audited by Mahfel Huq & Co , Chartered Accountants

and for the period ended 2011 audited by ACNABIN Chartered Accountants. Our report is as under:

1. The shepherd industries ltd was incorporated on 21 August 2000. 2. The Financial position of the Company over the last 5 years is as follows: A) The statement of assets and liabilities of the company was as

under:

Particulars

Amount in Taka

30-Jun-16 31-Mar-16 01-Apr-15 31-Mar-15 31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11

NON-CURRENT ASSETS Three Months Re-stated Re-stated Property, Plant & Equipment 1,334,235,677 1,302,877,602 1,354,364,604 830,378,882 834,781,166 754,374,214 676,087,949 684,962,135

Capital Work in Progress 50,407,119 43,123,793 - - - - - -

Intangible Asset 169,068 177,966 - - - - - -

Deferred Revenue Expenditure - - - - - - 4,643,837 4,643,837

Total Non-Current Assets 1,384,811,864 1,346,179,361 1,354,364,604 830,378,882 834,781,166 754,374,214 680,731,786 689,605,972

CURRENT ASSETS Inventory 1,184,165,958 1,380,280,441 1,268,250,601 689,510,352 799,961,176 781,725,397 792,562,751 609,129,692

Trade & other receivables 1,091,466,500 937,947,151 659,502,234 399,208,926 434,311,953 624,280,581 655,777,453 429,650,932

Investment 62,232,899 62,232,899 36,592,718 36,592,718 29,358,589 38,993,424 68,406,879 44,492,535

Advance, Deposits & Prepayments 77,844,133 74,963,426 60,975,070 47,414,639 52,144,201 42,967,179 42,263,764 19,491,488

Current a/c with related entity 15,100,000 29,100,000 279,349,957 373,407,931 371,738,996 260,840,604 242,768,630 242,768,630

Cash and Cash Equivalents 40,654,383 47,332,408 19,082,645 15,641,656 56,246,170 27,421,566 11,772,625 9,911,857

Total Current assets 2,471,463,873 2,531,856,325 2,323,753,225 1,561,776,222 1,743,761,085 1,776,228,751 1,813,552,102 1,355,445,135

TOTAL ASSETS 3,856,275,737 3,878,035,686 3,678,117,829 2,392,155,104 2,578,542,251 2,530,602,965 2,494,283,888 2,045,051,107

EQUITY & LIABILITIES Equity attributable to share holders Issued, Subscribed & paid up capital 1,042,059,860 1,042,059,860 191,194,000 88,574,000 88,574,000 88,574,000 88,574,000 88,574,000

Share Money Deposit 33,728,933 476,927,129 443,238,343 443,238,343 449,693,116 449,693,116 448,024,535

Revaluation Reserve 552,651,670 554,262,515 609,128,159 376,214,916 377,795,306 384,819,262 410,930,263 410,930,263

Retained earnings 353,760,682 303,605,008 157,668,849 32,355,290 18,733,423 -55,502,229 -39,865,601 -38,871,544

Total Shareholders equity 1,948,472,212 1,933,656,316 1,434,918,137 940,382,549 928,341,072 867,584,149 909,331,778 908,657,254

NON-CURRENT LIABILITIES Long Term Foreign Loan - - 38,505,032 38,505,032 38,505,032 38,505,032 38,505,032 38,505,032

Deferred Tax Liability 119,181,887 119,542,249 131,165,464 81,152,358 81,653,857 82,851,877 - -

Obligation under Finance Lease 4,003,683 4,475,454 - - - - - -

Total non-current liabilities 123,185,570 124,017,703 169,670,496 119,657,390 120,158,889 121,356,909 38,505,032 38,505,032

CURRENT LIABILITIES Trade & other Payables 968,869,108 1,043,939,623 867,628,960 561,066,650 919,635,893 1,081,766,139 845,663,373 359,961,022

Short Term Bank Loan 652,665,292 637,766,832 1,110,873,232 701,982,922 549,706,078 412,363,327 666,026,125 700,567,541

Liabilities for Expenses 127,561,187 136,922,468 95,027,004 69,065,593 60,700,319 47,532,441 34,757,580 37,360,259 Obligation under Finance Lease-Current Portion 1,793,435 1,732,744 - - - - -

Loan from shareholders 33,728,933 - - - - -

Total Current Liabilities 1,784,617,955 1,820,361,667 2,073,529,196 1,332,115,165 1,530,042,290 1,541,661,907 1,546,447,078 1,097,888,821

Total Liabilities 1,907,803,525 1,944,379,370 2,243,199,692 1,451,772,555 1,650,201,179 1,663,018,816 1,584,952,110 1,136,393,853

TOTAL EQUITY & LIABILITIES 3,856,275,737 3,878,035,686 3,678,117,829 2,392,155,104 2,578,542,251 2,530,602,965 2,494,283,888 2,045,051,107

- - - - -

NAV (With revaluation reserve) 18.7 18.56 75.05 106.17 104.81 97.95 102.66 102.59

NAV (Without revaluation reserve) 13.39 13.24 43.19 63.69 62.16 54.5 56.27 56.19

Share split on June 8, 2015; face value per share from tk. 100.00 Tk. 10.00. Thus, Net Asset Value (NAV) per Share for all the years is calculated through using tk. 10.00 per share.

Auditors' report under section 135(1) of the Companies Act, 1994 has been prepared on the basis of latest financial statements.

Place: Dhaka

Sd/-

Mahfel Huq & Co.

Date: November 10, 2016 Chartered Accountants

B) the statement of operating results of the company is as follow:


30-Jun-16 31-Mar-16 31-Mar-15 31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11

Three Months Re-stated Re-stated

Sales Revenue 756,861,925 2,636,557,896 390,141,810 1,780,751,795 1,878,484,554 1,883,339,590 1,179,310,883

Cost of Sales 669,410,501 2,331,681,538 346,930,751 1,576,699,811 1,667,224,358 1,732,311,277 1,067,359,827

Gross Profit 87,451,424 304,876,358 43,211,059 204,051,984 211,260,196 151,028,313 111,951,056

FC Gain/(Loss) -9,602,729 8,775,285 - - - - -





Add: Other Income 12,466,474 8,772,225 749,707 5,278,561 7,611,179 6,517,548 3,484,615






Basic Earnings Per Share (EPS) 0.46 4.37 1.36 8.62 3.95 0.20 0.12

Adjusted Earnings Per Share (EPS) 0.46 1.26 0.12 0.73 0.34 0.02 0.01

Share split on June 8, 2015; face value per share from tk. 100.00 tk 10.00 .Thus, Basic Earnings Per Share (EPS) per Share for all the years is calculated through using tk.

10.00 per share. Adjusted Earnings Per Share (EPS) for all the years is calculated considering the latest number of share i.e. 104,205,986

Place: Dhaka

Sd/-

Mahfel Huq & Co.

Date: November 10, 2016 Chartered Accountants


238

3 Dividend Declared

Particulars 30-Jun-16 31-Mar-16 31-Mar-15 31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11

Three Months

Cash Dividend Nil Nil Nil Nil Nil Nil Nil

Stock Dividend (Bonus

Shares) Nil Nil Nil Nil Nil Nil Nil

4 Shepherd Industries Ltd was incorporated in Bangladesh as a private limited company with the issuance of Certificate of incorporation

bearing no. c-41066(425)/2000. dated on August 21, 2000 by the registrar of joint stock companies & firms. The company converted to

public limited company on June 8, 2015 and split of share value Tk. 10 dated on 08 June 2015.

5 Reason for restatement:

a) During the year ended 31 March 2016 depreciation was erroneously understated by Tk. 2,737,695 for which correction has been made

retrospectively.

b) During the year ended 31 March 2016, as the tax provision is being at actual and deducted at source under section 53BBBB as final

settlement as per section 82( c) (2)(kk) of ITO 1984, no deferred tax asset or liabilities except deferred tax on revaluation reserve were

recognized in the financial statements and deferred tax recognized prior to that year was reversed accordingly. During the period ended

30 June 2016 section 82(c) has been changed by the Finance Act 2016 from final settlement to minimum tax for which tax deducted at

source shall not be considered as final settlement of tax liability rather shall be treated as minimum tax payable. Thus deferred tax has

been recognized in the financial statements and retrospective effect has been made accordingly.

c) Prior to current period ended 30 June 2016, depreciation on revaluation to be transferred from revaluation reserve to retained

earnings was wholly transferred instead of transferring net of tax. Moreover, deferred tax on revaluation of property, plant and

equipment which should be recognized directly in equity as per para 58 and 61A of BAS-12: "Income Taxes", recognized in Profit or Loss

and other Comprehensive Income and correction has been made accordingly.

d) During the year ended 31 December 2014, the company applied deferred tax for which retrospective adjustment had been made

accordingly.

6 Shepherd Industries Limited was amalgamated by the scheme of amalgamation with Shepherd Yarn Limited by the order of the

Honorable High Court of Supreme Court of Bangladesh dated December 15, 2014; with effect from April 01, 2015.Financial position as at

01 April 2015 had been prepared for incorporating the effect of said amalgamation.

7 The company started its commercial operation in 18 October 2001.

8 The company has no subsidiary company as on balance sheet date.

9 Comparative period/ year’s figure have been rearranged or reclassified whenever considered necessary with conform to current period

presentation.

10 No financial statement of the company has been audited for the period subsequent to 30 June 2016.

11 Financial Statements for the period ended 30 June 2016 had been prepared to comply of section 9 of the finance act, 2015.

Place: Dhaka

Sd/-

Mahfel Huq & Co.

Date: November 10, 2016



240

e) Financial Spread Sheet Analysis

Statement of Financial Position

Particulars

30-Jun-16

Amount in Taka % on Total Asset

NON-CURRENT ASSETS

Property, Plant & Equipment 1,334,235,677.00 34.60%

Capital Work in Progress 50,407,119.00 1.31%

Intangible Asset 169,068.00 0.0044%

Deferred Revenue Expenditure -

Long Term Security Deposit -

Total Non-Current Assets 1,384,811,864 35.91%

CURRENT ASSETS

Inventory 1,184,165,958 30.71%

Accounts & other receivables 1,091,466,500 28.30%

Investment in FDR 62,232,899 1.61%

Advance, Deposits & Prepayments 77,844,133 2.02%

Intercompany current a/c 15,100,000 0.39%

Cash and Cash Equivalents 40,654,383 1.05%

Total Current assets 2,471,463,873 64.09%

TOTAL ASSETS 3,856,275,737 100.00%

EQUITY & LIABILITIES

Equity attributable to share holders

Issued, Subscribed & paid up capital 1,042,059,860 27.02%

Revaluation Reserve 552,651,670 14.33%

Retained earnings 353,760,682 9.17%

Total Shareholders’ equity 1,948,472,212 50.53%

NON-CURRENT LIABILITIES

Long Term Foreign Loan

Deferred Tax Liability 119,181,887 3.09%

Obligation under Finance Lease 4,003,683 0.10%

Total non-current liabilities 123,185,570 3.19%

CURRENT LIABILITIES

Trade & other Payables 968,869,108 25.12%

Short Term Bank Loan 652,665,292 16.92%

Liabilities for Expenses 127,561,187 3.31%

Obligation under Finance Lease-Current Portion 1,793,435 0.05%

Loan from shareholders 33,728,933 0.87%

Total Current Liabilities 1,784,617,955 46.28%

Total Liabilities 1,907,803,525 49.47%

TOTAL EQUITY & LIABILITIES 3,856,275,737 100.00%


Statement of Profit and Loss and Other Comprehensive income

For the period from April 01, 2016 to June 30, 2016

Particulars

30-Jun-16

Amount in Taka % on Total Sales

Sales Revenue 756,861,925.00 100.00%

Cost of Sales 669,410,501.00 88.45%

Gross Profit 87,451,424 11.55%

FC Gain/(Loss) -9,602,729 -1.27%

Less: Operating Expenses 14,282,881 1.89%

Administrative expenses 12,305,498 1.63%

Selling , Marketing & Distribution Expenses 1,977,383 0.26%

Operating Profit for the Year 63,565,814 8.40%

Add: Other Income 12,466,474 1.65%

Profit Before Financial Expenses and Tax 76,032,288 10.05%

Less: Financial Expenses 16,131,226 2.13%

Net profit before tax 59,901,062 7.91%

Less: Income tax expense 11,701,414 1.55%

Net profit/(Loss) after Tax for the Year 48,199,648 6.37%


242

f) Earnings per Share (EPS) on fully diluted basis (The total existing no. of shares):

S.L Particulars Amount in Taka

1 Profit Attributable/Net profit after Tax 48,199,648

2 No. of shares before IPO 104,205,986

3 Earnings per Share (EPS) 0.46

g) All extra-ordinary income or non-recurring income coming from other than operations should be shown

separately while showing the Net Profit as well as the Earnings per Share:

SL Particulars Amount in Taka

1 Net profit before Tax 59,901,062

2 Less: Other Income (12,466,474)

3 Net Profit before tax except other income 47,434,588

4 Add: Deferred Tax Income 15,181

5 Less: Provision for Taxation (11,716,595)

6 Net profit after tax except other income 35,733,174

7 No. of shares 104,205,986

8 Earnings per Share (EPS) 0.34

h) Quarterly or half-yearly EPS should not be annualized while calculating the EPS:

Not applicable for Shepherd Industries Limited.

i) Net Asset Value (with and without considering revaluation surplus/reserve) per unit of the securities

being offered at the date of latest audited statement of financial position:

a) Net Asset value without Revaluation Reserve:

b) Net Asset value with Revaluation Reserve:

SL Particulars Amount in Taka

1 Paid up Capital 1,042,059,860

2 Retained Earnings 353,760,682

3 Revaluation Surplus 552,651,670

4 Total Shareholders’ Equity (With Revaluation Reserve) 1,948,472,212

5 Total Shareholders’ Equity (Without Revaluation Reserve) 1,395,820,542

6 Total Number of Ordinary Share 104,205,986

7 b) Net Asset value with Revaluation Reserve: 18.70

8 a) Net Asset value without Revaluation Reserve: 13.39

j) The commission may require the issuer to re-audit the audited financial statements, if any

deficiency/anomaly is found in the financial statements. In such a case, cost of audit should be borne by the

concerned issuer:

Not applicable for Shepherd Industries Limited.


243

(K) Auditors Certificate

i) Statement of Long Term and Short Term Borrowings Including Borrowing from Related Party or Connected Persons

Certification on Statement of Long Term and Short Term Borrowings Including Borrowing from Related Party or Connected PersoCertification on Statement of Long Term and Short Term Borrowings Including Borrowing from Related Party or Connected PersoCertification on Statement of Long Term and Short Term Borrowings Including Borrowing from Related Party or Connected PersoCertification on Statement of Long Term and Short Term Borrowings Including Borrowing from Related Party or Connected Personsnsnsns

After due verification, we certify that the Long Term and Short Term Borrowings Including Borrowing from Related Party or Connected Persons of Shepherd Industries Limited. for the last five years made up as follows:

For the period For the period For the period For the period from April 01, 2016 to 30 June 2016from April 01, 2016 to 30 June 2016from April 01, 2016 to 30 June 2016from April 01, 2016 to 30 June 2016

Name Of the PartiesName Of the PartiesName Of the PartiesName Of the Parties Nature of Nature of Nature of Nature of RelationshipRelationshipRelationshipRelationship

Nature of Nature of Nature of Nature of BorrowingsBorrowingsBorrowingsBorrowings

Balance as on Balance as on Balance as on Balance as on June 30, 2016June 30, 2016June 30, 2016June 30, 2016

Interest Rate (%)Interest Rate (%)Interest Rate (%)Interest Rate (%) Interest Paid (BDT)Interest Paid (BDT)Interest Paid (BDT)Interest Paid (BDT) Interest Accrued Interest Accrued Interest Accrued Interest Accrued (BDT)(BDT)(BDT)(BDT)

IFIC Bank Ltd. Gulshan Branch Lender Short Term 316,256,716 12% to 15.50% and LIBOR+5%

7,082,362 7,082,362

Southeast Bank Ltd. Gulshan Branch Lender Short Term 167,037,776 13% 3,645,022 3,645,022

Trust Bank Ltd. Gulshan Corporate Branch Lender Short Term 169,370,800 14.5% & 6% incase of foreign currency

2,327,858 2,327,858

IDLC Lessor Lease 5,797,118 13.85% 210,251 210,251

Loan from Shareholders' Shareholder Loan 33,728,933 0% - -

Grand TotalGrand TotalGrand TotalGrand Total 692,191,343692,191,343692,191,343692,191,343 13,265,49313,265,49313,265,49313,265,493 13,265,49313,265,49313,265,49313,265,493

For the period from April 01 2015 to March 31, 2016:For the period from April 01 2015 to March 31, 2016:For the period from April 01 2015 to March 31, 2016:For the period from April 01 2015 to March 31, 2016:


Nature of BorrowingsNature of BorrowingsNature of BorrowingsNature of Borrowings Balance as on Balance as on Balance as on Balance as on March 31, 2016March 31, 2016March 31, 2016March 31, 2016

Interest Rate (%)Interest Rate (%)Interest Rate (%)Interest Rate (%) Interest Paid (BDT)Interest Paid (BDT)Interest Paid (BDT)Interest Paid (BDT) Interest Accrued (BDT)Interest Accrued (BDT)Interest Accrued (BDT)Interest Accrued (BDT)

IFIC Bank Ltd. Gulshan Branch

Lender Short Term 321,876,094 12% to 15.50% and LIBOR+5%

29,861,487 29,861,487

Southeast Bank Ltd. Gulshan Branch

Lender Short Term 215,103,197 13% 35,632,697 35,632,697

Trust Bank Ltd. Gulshan Corporate Branch

Lender Short Term 100,787,541 14.5% & in case of foreign currency

6%

17,702,478 17,702,478

IDLC Lessor Lease 6,208,198 13.85% 886,408 886,408 National Bank Lender Short Term ---- 6%, 15.5%, 17.5% 31,325,784 31,325,784 Eternal Flame Int. Co. Ltd.

Lender Long Term (Foreign Loan) - 5% - - Interest Accrued 11,625,225 7,627,317 -

Sub-Total 11,625,225 7,627,317 - Grand TotalGrand TotalGrand TotalGrand Total 643,975,030643,975,030643,975,030643,975,030 ---- 115,408,854115,408,854115,408,854115,408,854 115,408,854115,408,854115,408,854115,408,854

For the Year ended December 31, 2014:For the Year ended December 31, 2014:For the Year ended December 31, 2014:For the Year ended December 31, 2014:


Nature of BorrowingsNature of BorrowingsNature of BorrowingsNature of Borrowings Balance as on 31 Balance as on 31 Balance as on 31 Balance as on 31 Dec. 2014Dec. 2014Dec. 2014Dec. 2014


National Bank Ltd. Mohakhali Branch

Lender Short Term 393,733,243 6%, 15.5%, 17.5%

49,222,697 49,222,697


Lender Short Term 147,933,460 15.50% 17,514,552 17,514,552



Eternal Flame Int. Co. Ltd. Lender Long Term (Foreign Loan)

38,505,032 5% - -

Interest Accrued 19,252,542 - 1,925,256 Sub-Total 57,757,574 - 1,925,256


.




Interest Rate Interest Rate Interest Rate Interest Rate (%)(%)(%)(%) Interest Paid (BDT)Interest Paid (BDT)Interest Paid (BDT)Interest Paid (BDT) Interest Accrued Interest Accrued Interest Accrued Interest Accrued (BDT)(BDT)(BDT)(BDT)





Bank Alfalah Ltd. Gulshan Branch

Lender Short Term 1,421,895 14.50% 50,971 50,971




38,505,032 5% - -

Interest Accrued 17,327,286 - 1,925,256 Sub TotalSub TotalSub TotalSub Total 55,832,318 - 1,925,256








Trust Bank Ltd. Gulshan Lender Short Term 211,977,106 14.50% 27,128,726 27,128,726

Corporate Branch Eternal Flame Int. Co. Ltd. Lender Long Term (Foreign

Loan) 38,505,032 5% -

Interest Accrued 15,402,030 1,925,256 Sub Total 53,907,062 - 1,925,256











38,505,032 5% - -

Interest Accrued 13,476,774 - 1,925,256 Sub Total 51,981,806 - 1,925,256


Place: Dhaka

Sd/-

MAHFEL HUQ & CO

Date: 25 September 2016 Chartered Accountants


246

i) Statement of Principal Terms of Secured Loans and Assets on which Charge have been Created against Those Loans

Certification on statement of Principal Terms of Secured Loans and Assets on which on which Charge have been Created AgainstCertification on statement of Principal Terms of Secured Loans and Assets on which on which Charge have been Created AgainstCertification on statement of Principal Terms of Secured Loans and Assets on which on which Charge have been Created AgainstCertification on statement of Principal Terms of Secured Loans and Assets on which on which Charge have been Created Against those Loans with names of lthose Loans with names of lthose Loans with names of lthose Loans with names of landers , anders , anders , anders , purpose, sanctioned amount , rate of interest , primary security , collateral/other security ,purpose, sanctioned amount , rate of interest , primary security , collateral/other security ,purpose, sanctioned amount , rate of interest , primary security , collateral/other security ,purpose, sanctioned amount , rate of interest , primary security , collateral/other security , rererere----payment schedule and status;payment schedule and status;payment schedule and status;payment schedule and status;

Particulars 30-Jun-16 31-Mar-16 31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11

Names of lenders Southeast Bank Ltd. Southeast Bank Ltd. Southeast Bank Ltd. Southeast Bank

Ltd.

Southeast Bank

Ltd.

Southeast Bank

Ltd.

Purpose Working Capital Working Capital No loan was taken No loan was

taken

No loan was

taken

No loan was

taken

Collateral Asset 655.75 Decimal Land 655.75 Decimal Land

Sanctioned Amount 1604.30 Millions 1604.30 Millions

Rate of Interest 13.00% 13.00%

Collateral Post dated cheque,

Hypothecation of

imported goods,

Machinery, Equipment

duly insured covering

the risk of fire and

personal guarantee of

all directors.

Post dated cheque,

Hypothecation of imported

goods, Machinery,

Equipment duly insured

covering the risk of fire and

personal guarantee of all

directors.

Re-payment schedule Re-payment from

proceed realization

Re-payment from proceed

realization

Status (Outstanding

balance Tk.)

167,037,776 215,103,197

ParticularsParticularsParticularsParticulars 30303030----JunJunJunJun----16161616 31313131----MarMarMarMar----16161616 31313131----DecDecDecDec----14141414 31313131----DecDecDecDec----13131313 31313131----DecDecDecDec----12121212 31313131----DecDecDecDec----11111111 Names of lendersNames of lendersNames of lendersNames of lenders IFIC Bank Ltd.IFIC Bank Ltd.IFIC Bank Ltd.IFIC Bank Ltd. IFIC Bank Ltd.IFIC Bank Ltd.IFIC Bank Ltd.IFIC Bank Ltd. IFIC Bank Ltd.IFIC Bank Ltd.IFIC Bank Ltd.IFIC Bank Ltd. IFIC Bank Ltd.IFIC Bank Ltd.IFIC Bank Ltd.IFIC Bank Ltd. IFIC Bank Ltd.IFIC Bank Ltd.IFIC Bank Ltd.IFIC Bank Ltd. IFIC Bank Ltd.IFIC Bank Ltd.IFIC Bank Ltd.IFIC Bank Ltd. PurposePurposePurposePurpose Working Capital Working Capital Working Capital Working

Capital

Collateral AssetCollateral AssetCollateral AssetCollateral Asset 1105 Decimal Land with two pre-

fabricated and three semi pacca buildings

673 Decimal Land with two pre-fabricated and

three semi pacca buildings

432 Decimal Land with construction of factory

premises

No loan was taken

No loan was taken

No loan was taken

Sanctioned AmountSanctioned AmountSanctioned AmountSanctioned Amount 3800 Millions 3800 Millions 1530 Millions 1530 Millions Rate of InterestRate of InterestRate of InterestRate of Interest 12.00% 12.00% 15.50% 15.50% CollateralCollateralCollateralCollateral Post dated cheque,

Hypothecation of imported goods,

Machinery, Equipment duly insured covering

the risk of fire and personal guarantee of

all directors.

Post dated cheque, Hypothecation of imported

goods, Machinery, Equipment duly insured covering the risk of fire

and personal guarantee of all directors.


goods, Machinery, Equipment duly insured

covering the risk of fire and personal guarantee of all

directors.

Post dated cheque,


goods, Machinery,




directors.

No loan was taken

No loan was taken

ReReReRe----payment schedulepayment schedulepayment schedulepayment schedule Re-payment from proceed realization

Re-payment from proceed realization

Re-payment from proceed realization


realization

Status (Outstanding Status (Outstanding Status (Outstanding Status (Outstanding balance Tk.)balance Tk.)balance Tk.)balance Tk.)

316,256,716 321,876,094 147,933,460 72,780,885

ParticularsParticularsParticularsParticulars 30303030----JunJunJunJun----16161616 31313131----MarMarMarMar----16161616 31313131----DecDecDecDec----14141414 31313131----DecDecDecDec----13131313 31313131----DecDecDecDec----12121212 31313131----DecDecDecDec----11111111 Names of lendersNames of lendersNames of lendersNames of lenders Trust Bank Ltd.Trust Bank Ltd.Trust Bank Ltd.Trust Bank Ltd. Trust Bank Ltd.Trust Bank Ltd.Trust Bank Ltd.Trust Bank Ltd. Trust Bank Ltd.Trust Bank Ltd.Trust Bank Ltd.Trust Bank Ltd. Trust Bank Ltd.Trust Bank Ltd.Trust Bank Ltd.Trust Bank Ltd. Trust Bank Ltd.Trust Bank Ltd.Trust Bank Ltd.Trust Bank Ltd. Trust Bank Ltd.Trust Bank Ltd.Trust Bank Ltd.Trust Bank Ltd. PurposePurposePurposePurpose Working Capital Working Capital Working Capital Working

Capital Working Capital

Working Capital

Collateral AssetCollateral AssetCollateral AssetCollateral Asset None 79.50 Decimals Land (Third Party)

- 432 Decimal Land

432 Decimal Land

432 Decimal Land

Sanctioned AmountSanctioned AmountSanctioned AmountSanctioned Amount 900 Millions 900 Millions 370 Millions 1500 Millions 2037.9 Millions

2037.9 Millions

Rate of InterestRate of InterestRate of InterestRate of Interest 14.50% 14.50% 15.50% 15.50% 14.50% 14.50% CollateralCollateralCollateralCollateral Hypothecation of

machineries, raw materials, work in process & finished

goodswith notarized IGPA duly insured

under bank's mortgage clause. Personal

guarantee of all the directors


goods, Machinery, Equipment duly insured covering the risk of fire

and personal guarantee of all directors.


goods, Machinery, Equipment duly insured

covering the risk of fire and personal guarantee of all

directors.

Post dated cheque,


goods, Machinery,




directors.

Post dated cheque,


goods, Machinery,




directors.

Post dated cheque,


goods, Machinery,




directors. ReReReRe----payment schedulepayment schedulepayment schedulepayment schedule Re-payment from

proceed realization Re-payment from proceed

realization Re-payment from proceed

realization Re-payment

from proceed realization


realization


realization Status (Outstanding Status (Outstanding Status (Outstanding Status (Outstanding balance Tk.)balance Tk.)balance Tk.)balance Tk.)

169,370,800 100,787,541 8,039,375 94,657,012 211,977,106 136,997,671

ParticularsParticularsParticularsParticulars 30303030----JunJunJunJun----16161616 31313131----MarMarMarMar----16161616 31313131----DecDecDecDec----14141414 31313131----DecDecDecDec----13131313 31313131----DecDecDecDec----12121212 31313131----DecDecDecDec----11111111 Names of lendersNames of lendersNames of lendersNames of lenders National Bank Ltd.National Bank Ltd.National Bank Ltd.National Bank Ltd. National Bank Ltd.National Bank Ltd.National Bank Ltd.National Bank Ltd. National Bank Ltd.National Bank Ltd.National Bank Ltd.National Bank Ltd. National Bank National Bank National Bank National Bank

Ltd.Ltd.Ltd.Ltd. National Bank National Bank National Bank National Bank

Ltd.Ltd.Ltd.Ltd. National Bank National Bank National Bank National Bank

Ltd.Ltd.Ltd.Ltd. PurposePurposePurposePurpose No Loan was taken Loan Fully Re-paid Working Capital Working

Capital Working Capital

Working Capital

Collateral Collateral Collateral Collateral AssetAssetAssetAsset 673 Decimal Land with 2 pre-fabricated and 3 semi

pacca building

673 Decimal Land with 2

pre-fabricated and 3 semi

pacca building



pacca building



pacca building Sanctioned AmountSanctioned AmountSanctioned AmountSanctioned Amount 2097 Millions 1785 Millions 1635 Millions 1955 Millions Rate of InterestRate of InterestRate of InterestRate of Interest 15.5% & 17.50% 15.5% &

17.50% 15% & 16% 13% & 15%

CollateralCollateralCollateralCollateral Post dated cheque, Post dated Post dated Post dated

Hypothecation of imported goods, Machinery,

Equipment duly insured covering the risk of fire and

personal guarantee of all directors.

cheque, Hypothecation

of imported goods,

Machinery, Equipment duly

insured covering the

risk of fire and personal

guarantee of all directors.


of imported goods,






of imported goods,





ReReReRe----payment schedulepayment schedulepayment schedulepayment schedule Re-payment from proceed realization


realization


realization


realization Status (Outstanding Status (Outstanding Status (Outstanding Status (Outstanding balance Tk.)balance Tk.)balance Tk.)balance Tk.)

393,733,243 243,503,535 454,049,019 563,569,870

Sd/-

Place: Dhaka MAHFEL HUQ & CO



250

iii) Statement of unsecured loan with terms and conditions of Shepherd Industries Limited.

This is to certify that Shepherd Industries Limited did not take any unsecured loan from 1 April 2016 to 30

June 2016 except Loan from shareholders' of Tk. 33,728,933 converted from share money deposit as per

decision of the Board which is interest free and repayable within one year from the date of conversion.

Certification on unsecured loan with terms and conditions of Shepherd Industries Limited.

Sd/-



iv) Statement of inventories:

Certification on statement of inventories raw material, dyes & chemical, packing material, work-in process, stores &

spares and finished goods inventory etc.

After due verification, we certify that the statement of inventories showing amount of raw material, dyes & chemical, packing

material, work-in process, stores & spares and finished goods inventory of Shepherd Industries Limited for the last five years were

as follows;


30-Jun-16 31-Mar-16 01-Apr-15 31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11

Three

Months

Raw Meterial 885,778,015 1,079,455,235 1,002,791,041 609,644,366 585,195,740 585,052,053 447,404,316

Dyes & Chemicals 180,962,892 182,518,968 183,154,837 143,177,511 94,670,555 97,594,052 88,933,185

Work-In-Process 25,369,907 24,190,990 26,193,712 16,407,463 39,886,871 25,152,932 8,530,473

Finished Goods 76,105,239 81,031,479 46,195,204 19,662,095 54,750,408 72,327,887 57,888,227

Packing Materials 5,428,062 5,184,031 9,915,807 11,069,742 7,221,823 12,435,827 6,373,491

Stores & Spares 10,521,843 7,899,738 - - - - -

Total 1,184,165,958 1,380,280,441 1,268,250,601 799,961,176 781,725,397 792,562,751 609,129,692

Sd/-



v) Statement of Trade Receivables of Shepherd Industries Limited.

Certification on statement of trade receivables showing receivable from related party and connected

persons of Shepherd Industries Limited

After due verification , we certify that Statement of trade receivables showing receivables from related party and connected persons

of shepherd Industries Ltd for last five years were as follows:



General 1,091,246,714 937,767,678 639,670,289 432,781,314 621,861,002 652,171,772 427,102,413

From Related Party - - - - - - -

From Connected Persons - - - - - 30,083 145,117

Total 1,091,246,714 937,767,678 639,670,289 432,781,314 621,861,002 652,201,855 427,247,530

Sd/-




252

VI) Loan Given to Related Party or Connected Persons by the Shepherd Industries Limited.

Certification on statement of any Loan Given by the issuer including loan to Related Party or Connected

Persons with rate of interest and interest realized/accrued by the Shepherd Industries Limited.



Related Party 15,100,000 29,100,000 279,349,957 371,738,996 260,840,604 242,768,630 242,768,630

Connected Person - - - - - -

General - - - - - -

Total 15,100,000 29,100,000 279,349,957 371,738,996 260,840,604 242,768,630 242,768,630

** The above balances was the result of inter company transactions which are interest free.

Sd/-



Vii) Statement of Other Income of Shepherd Industries Limited.

Certification on Statement of Other Income showing interest income , dividend income, discount received ,

other non-operating income of Shepherd Industries Limited.

After due verification, we certify that the other income showing interest income, dividend income, discount

received and other non-operating income of Shepherd Industries Ltd. for the last five years were as follows;

Particulars

Amount in BDT

30-Jun-16 31-Mar-16 31-Dec-14 31-Dec-13 31-Dec-

12 31-Dec-11

Interest Income 3,785 1,710,751 3,794,371 8,220,285 6,187,548 3,484,615

Land and House rent 723,915 3,106,105 - - - -

Gain/(Loss) from Sales of

Fixed assets

(214,810) 3,118,304 362,397 (698,658) - -

Sundry Income 328,359 837,065 1,121,793 89,552 330,000 -

Waiver of interest-foreign

loan

11,625,225

Total 12,466,474 8,772,225 5,278,561 7,611,179 6,517,548 3,484,615

Sd/-



viii) Statement of Turnover of Shepherd Industries Limited.

Certification on Statement of Turnover showing separately in cash and through banking channel of


After due verification, we certify that the turnover showing separately in cash and through banking

channel of Shepherd Industries Limited. During last five years were as follows;

Particulars

30-Jun-16

31-Mar-16 31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11 Three

Months

In Cash - - - - - -

Through

Banking

Channel

756,861,925 2,636,557,896 1,780,751,795 1,878,484,554 1,883,339,590 1,179,310,883

Total 756,861,925 2,636,557,896 1,780,751,795 1,878,484,554 1,883,339,590 1,179,310,883

Sd/-



ix) Statement of Related Party Transaction of Shepherd Industries Limited.

Certification on Statement of Related Party Transaction of Shepherd Industries Limited.

After due verification, we certify that the status of related party transactions of Shepherd Industries Ltd. for the last five years were as follows;

Particulars Relationship Nature of Transaction 30-Jun-16 31-Mar-16 01-Apr-15 31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11


Sale of Land - (27,640,000) - - - - -

Rental Income (324,615) (1,220,929) - - - - -



Management but at

present no relationship






Taiwan Food & Processing Industries

Ltd.

Common Management Intercompany Loan - - 57,684,848 38,919,589 10,754,639 - -

Investment 62,000,000 62,000,000 - - - - -

Rental Income (199,650) (728,116) - - - - -

Eternal Flame Int'l Co. Inc. Director Long Term Foreign

Loan

- - (38,505,032) (38,505,032) (38,505,032) (38,505,032) (38,505,032)

Interest on Foreign

Loan

- (11,625,225) (19,252,542) (19,252,542) (17,327,286) (15,402,030) (13,476,774)

Share Money deposit (4,351,405) (4,351,405) (127,605,337) (108,864,801) (108,864,801

)

(108,864,801) (108,864,801)


Ever Priority Limited Director Share Money deposit (18,786,859) (18,786,859) (327,914,080) (323,556,499) (279,739,651

)

(279,739,651) (279,739,651)




Ms Chiu Ching Ping Ex-Director Share Money deposit - - (294,223) (294,223) (294,223) (294,223) (294,223)

** Figures in brackets indicates credit balances.

** Balance amount of share money deposit of Eternal Flame Int'l Co. Inc., Kao Wen Fu, Ever Priority Limited and Chen Che Seng trasferred to loan from shareholder during

the period ended June 30, 2016

Sd/-



x) Reconciliation of Business Income Shown in Tax Return with Net Income Shown in Audited Financial

Statements

Certification regarding Reconciliation of Business Income Shown in Tax Return with Net Income Shown in

Audited Financial Statements Shepherd Industries Ltd for the last five years.

Particulars Assessment Year

2016-2017 2016-17 2015-16 2014-15 2013-14 2012-13

(3 Months)

Income Shown in

Audited Financial

Statements

- - 91,775,618 54,192,576 2,102,356 1,198,369

Less: Other Income - - 5,278,561 7,611,179 6,517,548 3,484,615

Add: Accounting

Depreciation

- - 37,410,904 35,626,138 32,674,511 33,768,610

Add: Inadmissable Item - - 2,843,408 17,488,171 34,783,228 8,885,648

- - 126,751,369 99,695,706 63,042,547 40,368,012

Less: Admissible

Expenses

- - 430,410 12,380,446 245,832 3,350,334

Less: Depreciation - - 35,674,391 31,686,347 24,366,873 24,616,328

- - 90,646,568 55,628,913 38,429,842 12,401,350

Add: Other Income - - 6,028,561 9,306,627 6,517,548 3,484,615

Income Shown in Tax

Return

- - 96,675,129 64,935,540 44,947,390 15,885,965

***The time for submission of the Financial Statements for the period ended 30 June 2016 and for the year ended 31

March 2016 have not been expired yet.

Sd/-



xi) Auditors disclosure regarding confirmation that all receipts and payments of the issuer above Tk.

500,000/- (Tk. Five Lac) were made through banking channel

Certification on receipts and payments above Tk. 5,00,000 (Five lac) were made through banking channel of


This is to certify that all receipts and payments of Shepherd Industries Limited above Tk. 500,000

(Five lac) were made through banking channel from 1 January 2011 to 30 June 2016.

Sd/-



xii) Auditors disclosure regarding confirmation that bank statements of the issuer are in conformity with its

books of accounts

Certification on books of accounts of Shepherd Industries Limited are in conformity with bank statements

This is to certify that the books of accounts of Shepherd Industries Limited from January 01, 2011 to June 30,

2016 are in conformity with bank statements.

Sd/-



xiii) Statement of payment of TAX, VAT and other Tax/Duties

Certification on status of payment of Tax , VAT and Other Taxes / Duties of Shepherd Industries Ltd.

After due verification, we certify that the status of Tax, VAT, and Other Taxes/Duties payment of Shepherd

Industries Ltd for the last five years were as follows:

Particulars Payment Status

30-Jun-16 31-Mar-16 31-Mar-

15

31-Dec-14 31-Dec-13 31-Dec-12 31-Dec-11

TAX 4,226,203 19,587,571 2,512,810 12,686,934 16,338,570 13,939,876 4,542,070

VAT Exempted Exempted Exempted Exempted Exempted Exempted Exempted

Other

Taxes/Duties

NA* NA* NA* NA* NA* NA* NA*

* Import under Bond Facilities

Sd/-



SECTION XXVII: PUBLIC ISSUE APPLICATION PROCEDURE

Step-1 (Applicant)

1. An applicant for public issue of securities shall submit application/buy instruction to the Stockbroker

Merchant Banker where the applicant maintains customer account, within the cut-off date (i.e. the

subscription closing date), which shall be the 25th (twenty fifth) working day from the date of


2. The application/buy instruction may be submitted in prescribed paper or electronic form, which shall

contain the Customer ID, Name, BO Account Number, Number of Securities applied for, Total Amount

and Category of the Applicant. At the same time:

a) Other than non-resident Bangladeshi (NRB) and Foreign applicants shall make the application

money and service charge available in respective customer account maintained with the

Stockbroker/Merchant Banker. No margin facility, advance or deferred payment is permissible for

this purpose. In case the application is made through a margin account, the application money shall

be deposited separately and the Stockbroker/Merchant Banker shall keep the amount segregated

from the margin account, which shall be refundable to the applicant, if become unsuccessful.

b) Non-resident Bangladeshi (NRB) and Foreign applicants shall submit bank drafts (FDD), issued in

favor of the Issuer for an amount equivalent to the application money, with their application to the

concerned Stockbroker/Merchant Banker. A Non-resident Bangladeshi (NRB) and Foreign applicant

may also submit a single draft against 02(two) applications made by him/her, i.e. one is his/her own

name and the other jointly with another person. The draft (FDD) shall be issued by the Bank where

the applicant maintains NITA/Foreign Currency account debiting the same account. No banker shall

issue more than two drafts from any NITA/Foreign Currency account for any public issue. At the same

time, the applicant shall make the service charge available in respective customer account maintained

with the Stockbroker/Merchant Banker.


3. The Stockbroker/Merchant Banker shall maintain a separate bank account only for this purpose namely

"Public Issue Application Account". The Stockbroker/Merchant Banker shall:

c) post the amount separately in the customer account (other than NRB and Foreign applicants),

and upon availability of fund, block the amount equivalent to the application money;

d) accumulate all the application/buy instructions received up to the cut-off date, deposit the

amount in the "Public Issue Application Account" maintained with its bank within the first banking

hour of next working day of the cut-off date. In case of application submitted by the Stock-dealer

or the Merchant Banker's own portfolio, the application amount should also be transferred to the

"Public Issue Application Account";

e) instruct the banker to block the account for an amount equivalent to the aggregate application

money and to issue a certificate in this regard.

4. Banker of the Stockbroker/Merchant Banker shall block the account as requested for, issue a certificate

confirming the same and handover it to the respective Stockbroker/Merchant Banker.

5. For Non-resident Bangladeshi (NRB) and Foreign applicants, the Stockbroker/Merchant Banker shall

prepare a list containing the draft information against the respective applicant's particulars.

6. The Stockbroker/Merchant Banker shall prepare category wise lists of the applicants containing

Customer ID, Name, BO Account Number and Number of Securities applied for, and within 03 (three)

working days from the cut-off date, send to the respective Exchange, the lists of applicants in electronic

(text format with tilde’~’ separator) format, the certificate(s) issued by its banker, the drafts received

from Non-resident Bangladeshi (NRB) and Foreign applicants and a copy of the list containing the draft

information.

7. On the next working day, the Exchanges shall provide the Issuer with the information received from the

Stockbroker/Merchant Bankers, the drafts submitted by Non-resident Bangladeshi (NRB) and Foreign

applicants and the list containing the draft information. Exchanges shall verify and preserve the bankers'

certificates in their custody.

8. The application/buy instructions shall be preserved by the Stockbroker/Merchant Bankers up to 6

months from listing of the securities with exchange.

Step-3 (Issuer)

9. The Issuer shall prepare consolidated list of the applications and send the applicants' BOIDs in electronic

(text) format in a CDROM to CDBL for verification. The Issuer shall post the consolidated list of

applicants on its website and websites of the Exchanges. CDBL shall verify the BOIDs as to whether the

BO accounts of the applicants are active or not.

10. On the next working day, CDBL shall provide the Issuer with an updated database of the applicants

containing BO Account Number, Name, Addresses, Parents' Name, Joint Account and Bank Account

information along with the verification report.

11. After receiving verification report and information from CDBL, the Issuer shall scrutinize the

applications, prepare category wise consolidated lists of valid and invalid applications and submit report

of final status of subscription to the Commission and the Exchanges within 10 (ten) working days from

the date of receiving information from the Exchanges.

12. The Issuer and the issue manager shall conduct category wise lottery with the valid applications within

03 (three) working days from the date of reporting to the Commission and the Exchanges, if do not

receive any observation from the Commission or the Exchanges.

13. The Issuer and issue manager shall arrange posting the lottery result on their websites within 06 (six)

hours and on the websites of the Commission and Exchanges within 12 (twelve) hours of lottery.

14. Within 02 (two) working days of conducting lottery, the Issuer shall:

e) send category wise lists of the successful and unsuccessful applicants in electronic (text format with

tilde ' separator) format to the respective Exchange.

f) send category wise lists of unsuccessful applicants who are subject to penal provisions as per

conditions of the Consent Letter issued by the Commission in electronic (text format with tilde

separator) format to the Commission and Exchanges mentioning the penalty amount against each

applicant.

g) issue allotment letters in the names of successful applicants in electronic format with digital

signatures and send those to respective Exchange in electronic form.

h) send consolidated allotment data (BOLD and number of securities) in electronic text format in a

CDROM to CDBL to credit the allotted shares to the respective BO accounts.


15. On the next working day, Exchanges shall distribute the information and allotment letters to the

Stockbroker/Merchant Bankers concerned in electronic format and instruct them to:

c) remit the amount of successful (other than NRB and Foreign) applicants to the Issuer's respective

Escrow Account opened for subscription purpose, and unblock the amount of unsuccessful applicants;

d) send the penalty amount of other than NRB and Foreign applicants who are subject to penal provisions

to the Issuer's respective Escrow Accounts along with a list and unblock the balance application money;

16. On the next working day of receiving the documents from the Exchanges, the

Stockbrokers/Merchant Banker shall request its banker to:

c) release the amount blocked for unsuccessful (other than NRB and foreign) applicants;

d) remit the aggregate amount of successful applicants and the penalty amount of unsuccessful

applicants (other than NRB and foreign) who are subject to penal provisions to the respective 'Escrow'

accounts of the Issuer opened for subscription purpose.

17. On the next working day of receiving request from the Stockbrokers/Merchant Bankers, their bankers shall

unblock the amount blocked in the account(s) and remit the amount as requested for to the Issuer's 'Escrow'

account.

18. Simultaneously, the stockbrokers/Merchant Bankers shall release the application money blocked in the

customer accounts; inform the successful applicants about allotment of securities and the unsuccessful

applicants about releasing their blocked amounts and send documents to the Exchange evidencing details of

the remittances made to the respective 'Escrow' accounts of the Issuer. The unblocked amounts of

unsuccessful applicants shall be placed as per their instructions. The Stockbroker/Merchant Banker shall be

entitled to recover the withdrawal charges, if any, from the applicant who wants to withdraw the application

money, up to an amount of Tk. 5.00 (five) per withdrawal.

19. All drafts submitted by NRB or Foreign applicants shall be deposited in the Issuer's respective 'Escrow'

accounts and refund shall be made by the Issuer by refund warrants through concerned stockbroker or

merchant banker or transfer to the applicant's bank account through banking channel within 10 (ten) working

days from the date of lottery.

Miscellaneous:

20. The Issuer, Issue Manager(s), Stockbrokers and Merchant Bankers shall ensure compliance of the above.

21. The bank drafts (FDD) shall be issued considering TT Clean exchange rate of Sonali Bank Ltd. on the date of


22. Amount deposited and blocked in the "Public Issue Application Account" shall not be withdrawn or

transferred during the blocking period. Amount deposited by the applicants shall not be used by the

Stockbrokers/Merchant Bankers for any purpose other than public issue application.

23. The Issuer shall pay the costs related to data transmission, if claimed by the Exchange concerned up to an

amount of Tk.2,00,000.00 (taka two lac) for a public issue.

24. The Stockbroker/Merchant Bankers shall be entitled to a service charge of Tk.5.00 (taka five) only per

application irrespective of the amount or category. The service charge shall be paid by the applicant at the

time of submitting application.

25. The Stockbroker/Merchant Banker shall provide the Issuer with a statement of the remittance and drafts

sent.

26. The Issuer shall accumulate the penalty amount recovered and send it to the Commission through a bank

draft/payment order issued in favor of the Bangladesh Securities and Exchange Commission.

27. The concerned Exchange are authorized to settle any complaints and take necessary actions against any

Stockbroker/Merchant Banker in case of violation of any provision of the public issue application process with

intimation to the Commission.

All eligible Stock Brokers and Merchant Bankers shall receive the IPO Subscription.

Others:

The IPO subscription money collected from investors will be remitted in following bank accounts with IFIC

Bank Limited:

SL # Account Bearing No. Account Title Currency

For Resident Bangladeshis

01 1002-063136-041 Shepherd Industries

Limited BDT

For Non-Resident Bangladeshis


Limited USD


Limited GBP


Limited EUR

APPLICATION FORM

“�� ।�� ”

APPLICATION FOR PUBLIC ISSUE

Date:

Name of applicant :

Client Code :

BO ID No. :

Category of applicant :

Name of the Company :

Number of Shares : ………..………….Shares of Tk.…………………each

Total amount in Tk. :

Amount in word :

Applicants Authorized Officer

SECTION (XXVIII): AUDITORS' ADDITIONAL DISCLOSURES:

1. Please provide a schedule from auditor mentioning last three years payment/ expense for childcare service and leave encashment service to workers;

Auditors’ Response: Details of payment/expense for child care service and leave encashment service to workers are as under:

Particulars 30/06/2016 31/03/2016 31/12/2014 31/12/2013 Leave encashment - 726,685 425,373 265,659

Salary for childcare facilities

405,868 370,656 312,000 249,600

2. It is observed from the draft prospectus of the company that Eternal Flame Int'l Co. Inc. holds

10.45% pre-IPO shares. It is also observed that most of the plant and machineries of the company were purchased from Eternal Flame Intl Co. Inc. Mention whether the transactions made with Eternal Flame Int'l Co. Inc. were on arm’s length basis or not;

Auditors’ Response: The Company purchased capital machineries through Eternal Flame Int’l. Co. Inc. from 2001 and all the transactions were completed through arms’ length basis.

3. It is observed from the audited financials para l8(a) of BAS-24 is not complied in disclosing transactions with related parties. As per cash flow statements transaction volume with related parties was Tk. 1.40 crore during the year.

Auditors’ Response: Para 18A of BAS-24 is not applicable for the company as there is no amount incurred by the company for the provision of key management personnel services that are provided by a separate management entity. All the key management personnel of SIL are dedicated only for the company. As such no information was disclosed in the notes to the financial statements.

The management of the Company decided not to do financial transactions with related parties and started recovering the loans provided to companies under common management. Net Tk. 1.40 crore was received during the year from Shepherd Textiles Limited as part of the said recovery process.

4. Disclosure as per Schedule XI , Part — II, Para 8 (a) to 8 (e);

Auditors’ Response: Disclosure as per schedule XI, Part-II, Para 8 (a) to (c) of the companies Act 1994 has been included in note # 37.1 to 37.6 of the audited financial statements for the year ended June 30, 2016.

SIL has not received in foreign currencies from exports of goods calculated on FOB basis, royalty, know-how, professional and consultation fees, interest and dividend and other income, indicating the nature thereof. Thus, Para 8(d) & 8(e) is not applicable for the company.

5. Year-wise break-up of interest charged on different bank loans, capitalization of loan interest and interest charged as financial expenses on the income statement;

Auditors’ Response: Year-wise break-up of interest charged on different bank loans, capitalization of loan interest and interest charged as financial expenses on the income statement are as follows:

FY/Period Name Of the Parties Interest Accrued (BDT)

capitalization of loan interest (BDT)

Interest charged as finance expenses on

the income statement (BDT)

April 01, 2016 to June 30, 2016

IFIC Bank Ltd. Gulshan Branch 7,082,362 - 7,082,362 Southeast Bank Ltd. Gulshan Branch 3,645,022 - 3,645,022 Trust Bank Ltd. Gulshan Corporate Branch

2,327,858 - 2,327,858

IDLC 210,251 - 210,251 Sub Total 13,265,493 - 13,265,493

April 01, 2015 to March 31, 2016

IFIC Bank Ltd. Gulshan Branch 29,861,487 - 29,861,487 Southeast Bank Ltd. Gulshan Branch 35,632,697 - 35,632,697 Trust Bank Ltd. Gulshan Corporate Branch

17,702,478 - 17,702,478

IDLC 886,408 - 886,408 National Bank 31,325,784 - 31,325,784 Sub Total 115,408,854 - 115,408,854

31-Dec-14 National Bank Ltd. Mohakhali Branch 49,222,697 - 49,222,697 IFIC Bank Ltd. Gulshan Branch 17,514,552 - 17,514,552 Trust Bank Ltd. Gulshan Corporate Branch

2,088,996 - 2,088,996

Eternal Flame Int. Co. Ltd. 1,925,256 - 1,925,256 Sub Total 70,751,501 - 70,751,501

31-Dec-13 National Bank Ltd. Mohakhali Branch 65,353,296 - 65,353,296 IFIC Bank Ltd. Gulshan Branch 1,110,885 - 1,110,885 Bank Alfalah Ltd. Gulshan Branch 50,971 - 50,971 Trust Bank Ltd. Gulshan Corporate Branch

43,744,642 - 43,744,642


31-Dec-12 National Bank Ltd. Mohakhali Branch 75,723,401 - 75,723,401 Trust Bank Ltd. Gulshan Corporate Branch

27,128,726 - 27,128,726


31-Dec-11 National Bank Ltd. Mohakhali Branch 67,444,032 - 67,444,032 Trust Bank Ltd. Gulshan Corporate Branch

4,280,380 - 4,280,380


Total 490,037,949 490,037,949

6. Auditors confirmation regarding obtaining balance confirmation certificates from all debtors as shown in note 8.00;

Auditors’ Response: Shepherd Industries Limited is a 100% Export oriented industry. The Company sells its products through Letter of Credit (L/C). The receivables are confirmed by the L/C opening corresponding bank. Hence, we did not sent balance confirmation letter to confirm the balances from debtors as mentioned in note 8.00.

7. Subsequent realization status of trade receivables on the signing date of audit report;

Auditors’ Response: Subsequent realization status of trade receivables on the signing date of audit report is enclosed herewith. (Annex: I)

8. Details of factory building; Auditors’ Response: Details of Factory Building are as under:

No of Building

Building Descripti

on

Type (Brick/Tin/Prefabricated

Steel)

Total Building

Area Each floor (sft)

Usages (sft)

Rate/Sft Amount in Tk.

Building-1 Three separate

Still Structured

Shed

Pre-fabricated steel structured building for manufacturing

59,965 59,965 420 25,179,975 Building-2 36,301 36,301 421 15,299,590 Building-3 71,204 71,204 418 29,742,026


R.C.C building, Executive dormitory, Canteen & Child Care- RCC-Grade Beam, RCC-Floor Slab, RCC-Pillar, RCC-Slab with Beam, RCC-Stair, RCC-Lintel, Brick Wall, Plaster, Wall Paint, Inside wall- Plastic Paint, Outside Wall- Weather Coat Thai Aluminum & 5mm Glass in window, Door, M.S Grill in Window.

2,148 6,444 1247 8,035,418


R.C.C Building for Gas Generator- RCC-Grade Beam, RCC-Floor Slab, RCC-Pillar, RCC-Slab with Beam, RCC-Stair, RCC-Lintel, Brick Wall, Plaster, Wall Paint, Inside wall- Plastic Paint, Outside Wall- Weather Coat, Thai Aluminum & 5mm Glass in window, Door, M.S Grill in Window

1,598.625 3,197.25 1124 3,593,913


R.C.C building for ware house- RCC- Slab with Beam, RCC-Lintel, Brick Wall Plaster, Wall Paint, Inside side, Plastic Paint, Outside Wall- Weather Coat, Thai Aluminum & 5mm Glass in window

9,500 57,000 1324 75,490,800


Semi pucca building for workers dormitory- Brick Wall & Teen Shed Roof with M.S angle

3,000 3,000 1236 3,706,902


Semi pucca building for factory office- Brick Wall & Teen Shed Roof with M.S angle

3,000 3,000 1183 3,549,335

Building-9 Semi Semi pucca building for 3,000 3,000 1224 3,672,971

pucca executive dormitory- Brick Wall & Teen Shed Roof with M.S angle

Building-10 Tin Shed 5 separate Tin shed warehouse Brick Pillar & Teen Shed Roof with M.S angle.

7,000 7,000 435 3,047,609

Total cost as at 30.06.2016 171,318,539 Add: Revaluation Surplus 158,824,830 Less: Accumulated Depreciation (128,253,934) Written down value as at 30.06.2016 201,889,435

9. Details of land & land development expenses with location;

Auditors’ Response: Disclosure regarding land and land development cost as shown in note 4 in the audited financial statement.

Sl. No. Location Sale Deed No. Area in Decimal

Deed Value in BDT

1 Bhaluka 2642 331.5 3,315,000 2 Bhaluka 2643 309.5 3,095,000 3 Bhaluka 2644 32 320,000 4 Bhaluka 3188 44 903,000 5 Bhaluka 3647 4.5 93,000 6 Bhaluka 3552 35 719,000 7 Bhaluka 3377 4.5 93,000 8 Bhaluka 6971 5 103,000 9 Bhaluka 6847 4.5 93,000 10 Bhaluka 8258 20.5 421,000 11 Bhaluka 8259 1.75 36,000 12 Bhaluka 1600 35.25 852,000 13 Bhaluka 3019 39 762,000 14 Bhaluka 3002 3 59,000 15 Bhaluka 3276 410 8,158,000 16 Bhaluka 515 42 1,267,000

17 Bhaluka 4335 432 39,931,000

18 Bhaluka 10730 39 4,565,000 19 Bhaluka 10390 21 2,496,000 20 Bhaluka 2426 62.75 15,000,000 21 Bhaluka 8103 177 6,700,000 22 Bhaluka 2625 24 1,062,000 23 Rupgoang 13683 8.52 1,250,000 24 Rupgoang 13684 8.52 1,250,000 25 Rupgoang 13353 8.25 1,200,000 26 Uttara 4992 11.82 28,000,000

2114.86 121,743,000 Add: Registration and other cost 11,869,926 Add: Development Cost 130,045,716 Total Cost of Land Asset 263,443,642

10. Compliance of para 59 of BAS-16 regarding changing depreciation on land development expenses;

Auditors’ Response: According to BAS-16 para 59 “If the cost of land includes the costs of site dismantlement, removal and restoration, that portion of the land asset is depreciated over the period of benefits obtained by incurring those costs. In some cases, the land itself may have a limited useful life, in which case it is depreciated in a manner that reflects the benefits to be derived from it.”

Land development cost of shepherd Industries Limited does not include any cost of site dismantlement, removal or restoration as there is no any such case. Thus no depreciation was considered on land development cost of Shepherd Industries Limited.

11. NPAT, EPS for the year ended 30-06-2016 considering charging depreciation on land development expenses from inception;

Auditors’ Response: Depreciation is not applicable on land and land development, therefore, NPAT and EPS for the year ended 30-06-2016 will remain unchanged.

12. Details of ETP including related civil construction;

Auditors’ Response: Details of ETP including related civil construction is as under:

SL. Details Taka 1 Machinery and Equipment 37,255,000 Civil construction: 2 Materials 15,610,161 3 Labour 191,900 4 Professional fee 6,200,000 5 Construction work 14,587,273 Total 73,844,334

13. Details of fire-fighting equipment in factory building;

Auditors’ Response: Details of fire-fighting equipment in factory building is as follows: SL. NO Details Quantity Taka


365,760

2 Fire Alarm 1 9,500 3 Fire Hose Pipe box 16 sets 156,000 4 Motor Control Panel 1 set 23,000 5 Installation & Others - 542,094 Total 1,096,354

14. Details of building in head office (Location, Floor area, Number of floors);

Auditors’ Response: Details of building in head office are as follows:

Particulars Location Number of Floor Area/Floor

Head Office Building House # 24, Road # 4, Sector # 4, Uttara, Dhaka-1230

G+5 3811.19 Sft

15. List of vehicles with oil, fuel & lubricants used during 2016 by each vehicle and whether they run with CNG;

Auditors Response: List of vehicles with oil, fuel & lubricants used for the three months period ended 30 June 2016 by each vehicle is as follows:

Shepherd Industries Ltd For the period 1st April'2016 To 30 June'2016

SL # Vehicle Number Vehicle Type Chassis & Engine Number Fuel Charge Taka

Repairing & Service and others Taka

Total Taka

1 DM-Gha-15-0041 Land cruiser prado TRJ150-0025568/ZTR-1145377 101,326.00 8,292.00 109,618.00 2 DM-Ga-17-0596 Hard Jeep, N/X Trail NT32-001331/MR20-514073B 43,659.00 2,481.00 46,140.00 3 DM-Ga-27-7098 Axio NZE141-6022160, 1NZ-C523275 41,711.00 15,065.00 56,776.00 4 DM-Ga-27-8253 X Corolla NZE121-0404078/1NZ-C259424 44,274.00 12,104.00 56,378.00 5 DM-Ga-27-5022 X Corolla NZE121-3283073, 1NZ-B352902 19,130.00 4,600.00 23,730.00 6 DM-Ga-22-5025 Probox NCP51-0256034, 1NZ-D815773 34,871.00 12,100.00 46,971.00 7 DM-Cha-53-8928 Hiace Micro TRH200-0102504/1TR-0782849 102,181.00 10,568.00 112,749.00 8 DM-Ma-11-0840 Covered Van (Small) LY102-0004049/5L-5120434 56,675.00 8,250.00 64,925.00 9 D.M-GA-29-2967 Car saloon NZT260-3048413/ 1NZ-D453053 36,645.00 2,569.00 39,214.00 10 DM-Cha-11-9792 Car saloon JN1CEAN16ZO-015229, QG13-306556 29,738.00 38,490.00 68,228.00 11 D.M-CHA-53-4572 MICROBUS KR42-5074708/7K-0874032 32,500.00 22,390.00 54,890.00 12 DM-Ma-11-3767 COVERED VAN MAT5240004FSR03300,

497SPT29DUY15591 119,925.00 4,330.00 124,255.00

13 D.M-AU-14-1025 COVERED VAN MAT38653477R34946/ 497TC93JSZ888500

75,085.00 19,080.00 94,165.00

737,720.00 160,319.00 898,039.00


268

16. Break-up of salary & allowances; Auditors’ Response: Breakup of salary and allowances are as follows:

Break up salary and allowances: Head Office Particulars 30/06/2016 31/03/2016 31/12/2014 31/12/2013 31/12/2012 31/12/2011

Salary 5,128,343 14,516,665 10,232,408 9,534,763 11,570,850 104,788,121

Bonus 1,052,016 1,097,267 759,209 854,665 759,826 780,810

Leave encashment 2,380 494,395 134664 106,166 -

6,182,739 16,108,327 10,991,617 10,524,092 12,436,842 11,259,622

17. Whether the company has complied with the requirement of the provision of the `BAS-21' regarding foreign currency transactions;

Auditors’ Response: The Company has complied with the requirement of the provision of the ‘BAS-21’ regarding foreign currency transactions and is disclosed in note: 2.06 of the audited financial statements for the year ended June 30, 2016.

18. Separate disclosers of salary & wages;

Auditors’ Response: Breakup of salary and wages are as follows: Break up salary and allowances: Factory Particulars 30/06/2016 31/03/2016 31/12/2014 31/12/2013 31/12/2012 31/12/2011 Salary 8,526,718 31,935,317 15,396,552 13,688,083 14,044,777 14,100,651 Bonus 1,579,369 2,278,427 1,616,034 1,528,993 1,491,610 1,946,481 Leave encashment - 726,685 425,373 265,659 220,111 - Wages-worker 6,418,609 21,117,531 12,041,862 14,160,240 13,020,232 12,038,648 Bonus-worker 1,183,804 2,694,059 1,321,751 1,568,739 1,420,639 866,770 Overtime 4,639,121 13,698,566 7,425,695 7,652,477 6,414,579 2,530,482 Tiffin & Refreshment 1,129,143 3,047,108 1,973,704 2,318,984 2,327,171 2,118,890

23,476,764 75,497,693 40,200,971 41,183,175 38,939,119 33,601,922

19. list of foreign employees working in the company during the year ended 30-06-2016;

Auditors’ Response: During the year ended 30-06-2016, two foreign employees worked in the company which is listed below:

SL # Name of the employee Period of work 01 Mr. Lei Bin from 13.12.2015 02 Mr. Li Zhiyang from 16.02.2016

20. Detailed disclosers regarding capital working-in-progress;

Auditors’ Response: Detailed disclosers regarding capital working-in-progress are as follows:

Capital Working Progress (Machineries)

Sl.No. L/C No. & Supplier

Particulars of machineries Invoice Value (USD)

Invoice Value (BDT)

Present status

1

L/C No. 080215026201 Sonic Eagle Industries Limited

Yarn pressure and yarn carrier machine, Model No. YS20T-1set and YS10T-1set

20,000

1,560,000

Machinery arrived Installation under process

2


Hanks to Cone Winding Machine, Model No.FH230D, 20 sets and Horizontal Yarn Expansion Machine, Model-FH420-6, 5 sets

183,400

14,305,200


3


Radio Frequency Dryer with standard accessories, Model No. GFD-85KW, 1 set

92,100

7,183,800


4


Radio Frequency Dryer with standard accessories, Model No. GFD-85KW, 1 set

93,500

7,293,000


5


1) Industrial Washing Machine, Model-XSJ-300, 9 sets, Model-XSJ-50, 6sets, 2) Industrial Drying Machine Model-JN-150, 8 set, Model-GYJ-3, 2 sets 3) Industrial Hydro Extractor, Model-TSJ-42, 2 sets 4) Hand Brashing, Model-ML-1, 15 sets 5) Industrial Trolly, 15 sets 6) Hand Pallet Truck, 2 sets

76,184

5,942,352


6


1) Industrial Washing Machine, Model-XSJ-300, 11 2) Industrial Drying Machine Model-JN-150, 12 set, 3) Industrial Hydro Extractor, Model-TSJ-16, 2 sets 4) Screw Air Compressor, Model-UT-50, 2 sets 5) Industrial Trolly, 25 sets 6) Ozone Sterilizing, 2 sets

105,826

8,254,428


Sub Total: 2,400 187,200

7 Local cost C&F, Carrying, Cable,

Hardware materials etc. 5,681,139

Grand Total: 50,407,119

21. Detailed disclosers regarding trade receivables as per requirement of schedule XI of the Companies Act, 1994;

Auditors’ Response: Disclosers regarding trade receivables as per requirement of schedule XI of the Companies Act, 1994 has been disclosed in note: 8 of the audited financial statements.

22. Detailed disclosers of current Account with related party as shown in the cash flow statement;

Auditors’ response: Disclosers of current Account with related party as shown in the cash flow statement of Audited Financial Statements are as follows: Statement of Cash Flows (Extract) Cash Flows From Financing Activities: Current A/C with related entity

Opening Balance as on

01/04/2016

Movement during the year (Payment)

Closing Balance as on

30/06/2016 Shepherd Textile (BD) Limited 29,100,000 (14,000,000) 15,100,000 Total 29,100,000 (14,000,000) 15,100,000

23. Dates of loan provided to related parties as disclosed in note 11.

Auditors’ response: The balance amount of Tk. 15,100,000is actually the balance of intercompany current account. Movement of transactions between the companies under common management has been shown in the auditors’ additional disclosure # 25.

24. Disclosure regarding origination of Fictitious Assets and reason for adjustment thereof; Auditors’ Response: Fictitious asset of tk. 1,77,70,413 was originated from the excess amount of trading addition made through assessment of income by the tax authority for Shepherd Yarn Ltd.(Amalgamated Company) for the assessment year from 2009-2010 to 2012-2013. Such trading addition has been recognized in the financial statements for the year ended March 31, 2013 by debiting intangible out of assessment and crediting retained earnings to reconcile the accounting profit with the tax profit.

Though intangible assets out of assessment is accepted by the tax authority, as there was originally no existence of such transaction the management of the company has decided to derecognize the transaction and adjustment has been made accordingly by debating retained earnings and crediting intangibles out of assessment to fairly reflect the statement of financial position.

25. It appears from the statement of cash flows that you have considered receipt from Intercompany current account under the head cash flow from financing activities which is not in line with the BAS-7 para 16(e). Auditors’ Response:Cash flow statements for the period ended June 30, 2016 shall be read as follows:

Particulars Notes Amount in Taka Amount in Taka 30.06.2016 30.06.2015 A) Cash Flows from Operating Activities Received from customers and others 32 599,748,935 458,697,047 Payment to Creditors, Suppliers, Employees and Others 33 (586,950,452) (432,344,223)

Cash inflow/(outflow) from operation 12,798,483 26,352,824 Income Tax Paid 34 (4,226,203) (4,247,255) Net cash provided by Operating Activities 8,572,280 22,105,569 B. Cash Flows from Investing Activities Acquisition of Property, Plant & Equipment’s (24,149,832) (13,822,325) Proceeds from Sale of Property, Plant & Equipment’s 600,000 - Payment for Capital Work-in-Progress 35 (3,657,898) - Current a/c with Related Entity 14,000,000 151,841,548 Investment in FDR - (6,411,981) Investment in Share Money Deposit of Taiwan Food

and Processing Industries Limited - (62,000,000)

Advance Lease Deposits - (414,220) Net cash provided by Investing Activities (13,207,730) 69,193,022 C. Cash Flow from Financing Activities Short Term Loan Received/(Paid)-Net 14,898,460 6,906,049 Obligation under Finance Lease Received/(Paid)-Net (411,080) 7,359,835 Financial Expenses Paid (16,131,226) (35,276,513) Net cash used in by Financing Activities (1,643,846) (21,010,629) D. Net Increase/(Decrease) in cash and Cash Equivalent (6,279,296) 70,287,962 E. Cash & Cash Equivalent at beginning at the period 47,332,408 19,082,645 F. Unrealized gain/(loss) (398,729) (97,250) G. Cash & Cash Equivalent at the end of the period 40,654,383 89,273,357

Net Operating Cash Flow per Share 0.08 1.16

26. Auditors’ disclosure regarding advance of Taipei office and subsequent status thereof;

Auditors’ Response: Actually the amount was paid as advance to the dedicated personnel of the company to meet up the travelling expenses of foreign delegates visited with the directors for business purpose. The name Taipei office was commonly used for the expenses of all such foreign delegate’s and later on adjusted after due authorization by the management. Subsequent status of the said advances is as follows:

Particulars Amount in Tk.

As on 30.06.2016 Subsequent Status

Balance of advance to foreign delegates for the period ended June 30, 2016

415,200 -

Total 415,200 -

27. Break-up of acquisition of property plant and equipment as shown in the cash flow statement;

Auditors’ Response: Break-up of acquisition of property plant and equipment as shown in the cash flow statement are as follows:

Particulars Amount (Tk.) Asset addition during the period ended June 30, 2016 as per schedule of property, plant & equipment

: (45,064,832)

Less: Transfer from capital work in progress : 12,000,000 Less: Payable for acquisition of property, plant & equipment : 8,915,000 Acquisition of property, plant & equipment as shown in the Statement of cash flows

: (24,149,832)

28. Contingent liability disclosure regarding Bank Guarantee Margin with reference to note 2.30.

Auditors Response: The Company has a contingent liability of Tk. 19,211,326 against bank guarantee issued by differentbanks at different datesfor different purposesfor which the company has paid Tk. 3,150,507 as bank guarantee margin.Contingent liability disclosure for the period ended June 30, 2016 shall be read as follows: “Contingent Liabilities and Contingent Assets are present or possible obligations on liabilities or assets , arising from past events and existence of which depends upon the occurrence or non-occurrence of one or more uncertain future events which are not within the control of the company or which amount of the obligations cannot be measured with sufficient reliability in accordance with BAS-37 . The company has a contingent liability of Tk. 19,211,326 against total bank guarantee of Tk. 22,361,833 issued by different banks at different dates for different purposes for which the company has paid Tk. 3,150,507 as bank guarantee margin.”

29. Revised disclosure as per schedule XI para 4 of the Companies Act 1994 for remuneration paid to MD and directors as shown in the note:37.2(a)

Auditors Response: Disclosure as per schedule XI para 4 of the Companies Act 1994 for remuneration paid to MD and directors as shown in the note: 37.2(a) shall be read as follows:

a) Key Management Personnel: As per Company Act , 1994 part-II , Schedule-XI (4) The profit and loss account will give by way of a

note detailed information , showing separately the following payments provided or made during the financial year to the directors , including managing director , the managing agents or manager , if any ,by the company , subsidiaries of the company and any other person:-

No.

Particulars 30.06.2016 30.06.2015

(a) Managerial Remuneration paid or payable during the period to the directors, including managing directors, a managing agent or manager

- -

(b) Expenses reimbursed to Managing Agent - -

(c) Commission or Remuneration payable separately to a managing agent or his associate

- -

(d) Commission received or receivable by the managing agent or his associate as selling or buying agent of other concerns in respect of contracts entered into by such concerns with the company

- -

(e) The money value of the contracts for the sale or purchase of goods and materials or supply of services, entered into by the company with the managing agent or his associate during the financial period.

- -

(f) Any other perquisite or benefits in cash or in kind stating approximate money value where applicable.

(g) Other allowances and commission including guarantee commission - -

(h) Pensions etc. - -

(i) Pensions - -

(ii) Gratuities - -

(iii) Payments from a provident funds, in excess of own subscription and interest thereon

- -

(i) Share Based payments - -

As per BAS- 24:

An entity shall disclose key management personnel compensation in total and for each of the following benefits:

(a) Short-term employee benefits 2,900,625 2,514,750

(b) Post-employee benefits 361,613 313,506

(c) Other long term benefits - -

(d) termination benefits and - -

(e) share- based payment - -

Total: 3,262,238 2,828,256

Sd/- Place: Dhaka MAHFEL HUQ & CO Date: 09November 2016 Chartered Accountants

Annex: I

SHEPHERD INDUSTRIES LIMITED SUBSEQUENT REALIZATION STATUS OF ACCOUNTS RECEIVABL E AS ON 22.09.2016

S.L Particulars Amount in Taka Amount in Taka 30.06.2016 Subsequent realization as

on 22.09.2016 1 AB Sweater Ltd 12,784,182 8,762,718 2 AKR Fashion Ltd 134,993 - 3 Al- Amin Export Ltd 2,625,281 2,625,480 4 Aman Knitters Ltd. - - 5 AMS Int'l Sweater Ltd 2,034,323 - 6 Annanta Huazin Ltd. 3,358,894 - 7 Annesha Style Ltd 3,468,184 3,287,814 8 Anzir Apparels Limited 1,842,265 684,450 9 As Apparels Ltd. 33,115,434 19,992,000 10 Azam Knitting Ltd - - 11 Banga Fashion Ltd 1,086,585 1,085,175 12 Best Wool Sweater Ltd. 101,299,324 94,420,989 13 Body Fashion (PVT) Ltd 1,130,776 8,219,578 14 Claxton Apparels 4,378,887 4,818,996 15 Cosmos Sweater Ltd 13,308,065 13,303,539 16 Crown Yarn Dyeing Ltd - - 17 Daeyu Bangladesh Ltd. - - 18 Desh Sweater Ltd 75,243 - 19 Dhaka Pullover Ltd. 2,314,317 - 20 Diganta Sweater Ltd 77,377,808 75,063,374 21 Din Apparels Ltd. 1,560,060 1,787,520 22 Dody Export Wear Ltd 730,711 460,522 23 D & S Pretty Fashion 722,821 788,449 24 Ducati Appeaarls Ltd 957,912 1,470,000 25 Dynamic Sweater Ltd 7,517,590 - 26 Ehsan Fashion Ltd 3,077,811 3,135,608 27 Ekram Sweater Ltd. 13,478,665 12,518,175 28 En Rich Ltd. 14,785 - 29 ESE Knitwear Ltd 5,553,307 - 30 Eva Sweater Ltd. 5,601,029 5,587,842 31 Everbright Sweater Ltd 3,926,997 - 32 Evergreen Sweater 2,207,270 2,207,309 33 Fancy Yarn Department 140,532 - 34 Fashion Design Ltd 1,277,046 - 35 FB Fashion (Pvt) Ltd. 937,060 1,402,948 36 Freedom Knit Ltd 1,883,591 - 37 Fyne Sweater Ltd. 1,694,224 1,694,224 38 Global Knitwear Ltd. 14,990,997 11,121,824 39 Golden Times Sweater Ltd. - - 40 Green Arrow Sweater Ltd. 4,969,956 3,146,231 41 Haesong Korea Ltd. 18,224,856 10,221,400 42 Haesong Sweater Ltd 248,504 - 43 Hamid Fashion Ltd. 3,480,874 - 44 Hannan Fashion Ltd - 3,371,827 45 Helicon Ltd. 9,839,431 9,847,765 46 Impulse Sweater Ltd 5,076,760 2,746,232 47 Indesore Sweater Ltd. 12,946,494 5,339,568 48 Intramex Sweater Ltd. 387,649 -

49 Irish Fashion Ltd. 31,804,255 20,961,950 50 Jams Sweater Ltd 4,997,742 2,625,616 51 Jazz Sweater Ltd 5,441,542 3,053,437 52 Knitexpo Ltd 7,075,530 5,488,627 53 Knit Studio Ltd. 2,695,417 - 54 Kuliarchar Sweater 7,426,065 7,054,993 55 Lusine Fashion Ltd. 22,340,745 13,443,124 56 Magpie Knitwear Ltd. 34,135,998 3,996,930 57 Mahdeen Sweater Ltd. 13,771,034 9,856,812 58 Mantrust Sweater Ltd. - - 59 Mark Sweater Ltd. - - 60 Masihata Sweater Ltd - - 61 Matrix Sweater 25,991,799 25,715,200 62 Mccoy Sweater Ltd. 369,107 - 63 Meditex Ind. Ltd. 32,154,701 39,783,978 64 Meek Sweater Ltd 1,689,050 1,689,050 65 Merline Knittwear Ltd - - 66 M.G. Knit Fiairs Ltd 3,663,005 3,322,822 67 Micro Tex Ltd 217,764 - 68 Midline Fashion Ltd - 767,481 69 M I Knit Wear Ltd 2,346,355 - 70 MK Sweater 3,545,507 2,327,657 71 Moni Fashion Ltd 39,385,263 11,949,420 72 Natural Sweater Village 10,039,144 9,719,524 73 Natural Wool Weater 866,442 - 74 Naziat Sweaters Ltd. 1,808,225 - 75 New Horizon Ltd 4,222,845 - 76 Nexus Sweater 6,957,745 954,089 77 Nurani Deying - - 78 Oasis Fashions Ltd 13,662,313 6,604,714 79 Ocean Sweater Ltd - - 80 Odessa Fashion Ltd. 5,032,395 - 81 Omega Sweater 2,199,241 - 82 Oriental Wool Wear Ltd - - 83 Orpat Sweater Ltd 2,078,215 2,089,404 84 Padma Sweater 202,861 202,860 85 Panache Knitted Creation 70,560 - 86 Pandora Fashion Ltd 3,993,117 3,125,949 87 Perfect Sweater Ltd - 502,788 89 Pioneer Sweater Ltd. 130,580,546 38,966,088 90 Platinum Sweater Ltd - - 91 Posmi Sweater Ltd 1,784,499 522,340 92 Pretty Sweater Ltd 37,758,321 18,886,043 93 Prodridhi Apparel Ltd 2,470,074 932,568 94 Pro- Maker Sweater 5,097,594 4,204,886 95 Radient Sweater Ltd. 6,641,634 5,492,171 96 Rahimaaziz Knits Ltd 1,883,364 - 97 Raozan Sweater Ltd. 6,347,858 117,718 98 Red & Green Textile 361,267 361,267 99 RGR Sweater Ltd 2,687,507 6,702,541 100 Riverside Sweater Ltd 3,119,536 3,119,536 101 R M M Sweater Ltd 4,189,365 3,662,648 102 Rose Sweater Ltd. 928,960 1,868,664 103 R S Sweater Ltd 4,157,094 759,696 104 Running Fashion Ltd. 4,723,083 4,870,992

105 Rupa Sweater Ltd. 19,843 - 106 Saadatia Sweater Ltd. 3,121,164 2,251,082 107 Sahaba Yarn Ltd 2,263,941 2,257,920 108 Salek Textile Ltd. (Receivable) 8,163,102 - 109 Scandex (BD) Ltd. 580,356 - 110 Seowan Bangladesh Ltd. 13,076,648 9,276,413 111 SFS Sweater Ltd - - 112 S F Sweaters Ltd. 3,615,233 - 113 Sharin Fashion Ltd 9,929,497 6,189,360 114 Shezads Designer 11,209,619 9,880,360 115 Shomahar Sweater 15,745,823 9,896,350 116 Sinha Knit Ind. Ltd 9,237,209 - 117 Smung Sweater Ltd 550,598 - 118 Sonia & Sweater Ltd. 7,848 - 119 Southend Sweater Ltd 1,261,272 1,229,312 120 Southern Clothing Ltd. - - 121 Space Sweater Ltd 1,901,639 1,902,925 122 Spring Trade 10,712,807 10,719,632 123 SQ Celsius Ltd 6,820,769 6,820,769 124 SQ Huse LTD - - 125 Sung Kwang Apparels 21,162,512 20,618,755 126 Sunkit Textile Ltd. 77,357 - 127 Tapestry Design Co. 137,200 - 128 Target Fine Knit Industries Ltd. 16,870,360 5,024,264 129 T. Design 93,139 177,615 130 That's It Knit Ltd. 149,609 291,824 131 Titas Sweater Ind. Ltd 2,228,175 1,788,108 132 TJ Sweater Ltd 7,295,711 6,467,796 133 Top Tex Ltd 2,433,765 - 134 Unicorn Sweater 1,694,042 1,505,280 135 Welldone Apparels Ltd 42,943,958 23,725,109 136 Woolen & Wool Ltd 2,255,132 2,538,929 137 Y.K SWEATER LTD 7,764,949 141,857 138 Your Fashion Ltd 7,450,105 4,547,474 139 Zon Ron Sweater Ltd. - - 140 Z.R Sweater Ltd - - Total Trade Receivable

1,095,469,559 702,066,274

Place: Dhaka Date: November 09, 2016

Sd/- Mahfel Huq & Co.


SECTION (XXIX): MANAGEMENT’S ADDITIONAL DISCLOSURES REQUIRED TO SUBMIT AND

INCORPORATED IN THE PROSPECTUS.

1. Justification of going into IPO for Tk. 20 (Twenty) crore in spite of having investment in FDR of Tk. 2,32,899 and Taiwan Food and Processing Industries Limited amounting to 6.2 (Six point Two)crore and balance of interest free loan amounting to Tk. 2.91 (Two point nine one)crore given to sister concern is to be submitted and the same is to be incorporated in the draft prospectus under management disclosure; Management Response: Investment in Taiwan Food and Processing Industries Limited is already withdrawn by the company on 21-09-2016. Management of the company has already decided to stop the intercompany transactions and will be recovered as soon as possible. Investment in FDR is a very nominal amount and will not help the company to establish the washing plant and in expansion of business.

2. It appears that company has given loan to eight related parties without interest and taken loan

from one related with interest. Explain why you have provided interest free loan taken from related party while no interest is charged on loan given to the related party;

Management Response: Eternal Flame Int’l Co. Inc. deposited share money deposit in 2008 to Shepherd Industries Limited (SIL). SIL received loan from Eternal Flame Int’l Co. Inc. back in 2004 when SIL has only business relationship with the said company. The amount received was actually foreign loan and was received at 5% interest rate. The company has settled all the transactions with Eternal Flame Int’l Co. Inc and balance amount of interest amounting Tk.11,625,225 has been waived by Eternal Flame Int’l Co. Inc.

The loan given to the related parties are the intercompany current account transactions between the companies under common management and the companies are operating business in Bangladesh and all the transactions occurred was without interest. The company is already in a process of settling transactions between the inter companies and will not provide any loan to the companies under common directorship the remaining balances of the intercompany current account will be recovered as soon as possible.

3. You have made agreement with only one underwriter who is also your issue manager;

Management Response: 35% of the total issue size has been underwritten and the underwriter has the sufficient resources as per the regulatory requirement to discharge the required obligations to underwrite.

4. Environment certificate of proposed washing plant;

Management Response: For environment clearance of the proposed washing unit and BMRE of the dying unit the company will apply to the environment authorities, which are the norms for obtaining any approval. Moreover, the company has a large biological ETP and Expansion is under process the company will obtain the environment clearance after completion of the required tasks.

5. Your company has not recognized Worker's Profit Participation and Welfare Fund in the financial statements prepared for the year ended on June 30, 2016. Provide management disclosure regarding this and incorporate the same in the draft prospectus; Our Response: Shepherd Industries Limited (SIL) is a 100% export oriented company and member of Bangladesh Dyed Yarn Exporters Association (BDYEA). As per Section 232 of Bangladesh Labor (Amendments) Act. 2013, which states that in sub-section 2 “ The Government may, by notification in the official gazette apply this chapter to such other companies as it may specify therein.” And in Sub-section “notwithstanding anything contained in the sub-section (1) and (2), in Industrial Sector which is hundred percent export oriented or which is hundred percent foreign invested. The government may, by rules, for the beneficiaries working in such sectors, from sector-wise a central fund consolidating buyers and owners, fund management board, determine amount of donation and procedure for recovery thereof, adopt rules for using money of that fund and relevant other rules. Provided that, such board, may very prior approval of government adopt regulations for the purpose of this section.” For the above reason management didn’t start making provision for WPPF because of not yet forming Board for fund raise and utilization by the government. The board shall format the rules of determination of subscription, procedure of collection and utilization of fund. SIL is a 100% export oriented company also the member of BDYEA, that’s why in the audited financial statements did not recognize WPPF.

6. A declaration from issuer & issue manager regarding whether Cost Audit is mandatory as per provision of the Companies Act, 1994. Our Response: Declaration from the issuer and issue manager is as follows: Date: 23 September 2016

Statement regarding Cost Audit This is to certify that, as per provision of the Companies Act 1994, Cost Audit by Professional Accountant is not applicable for “Shepherd Industries Limited”. Sd/- Sd/- Sd/- (Md. Ataur Rahman) Chief Financial Officer Shepherd Industries Limited

(Kao Wen Fu) Managing Director


(Noor Ahamed FCA) CEO & Managing Director

Alpha Capital Management Limited

SECTION (XXX): CERTIFICATE FROM AN INDEPENDENT AUTH ORITY REGARDING CAPACITY OF ETP MACHINE:

Date: October 02, 2016

To Whom It May Concern:

This is to certify that M/S. Shepherd Industries Ltd. Corporate Office: Shepherd Tower, House-24, Road-4, Sector-4, Uttara, Dhaka-1230, having factory at Bagrapara, Kathali, Bhaluka, Mymenshing. We visited the factory for inspection of ETP. We found in our observation that Shepherd Industries Ltd. has a Biological Effluent Treatment Plant (ETP) having 06 (six) water tanks with capacity of 4300 m3/day. According to DOE (Department Of Environment) norms total waste water come from the production must be purified through the existing ETP. As per management's future plan about the expansion of production will be held soon & the requirement of additional treatment plant (ETP) will be 3700 m3/day. In order to purify the additional waste water M/S. Shepherd Industries Ltd. will set up additional necessary tank. The capacity of the additional tank will be 3700 m3/day. As a result the total flow of waste water including additional 3700 m3/day will be treated accordingly to follow the DOE (Department Of Environment) norms as well as to keep the smooth production.

Sd/- Md. Helal Uddin B.Sc Engineer (Mechanical) General Manager (Technical) Texmac (Bangladesh) Ltd.